Digital online exchange for pricing items to exhaust inventory by an expiration time

ABSTRACT

A dynamic pricing system for pricing items for sale by a seller which items are available in a limited quantity comprises a pricing server and various types of data stored in memory. The pricing server includes memory, a processor and a clock. Types of data stored in memory are indicative of the initial quantity of an item available and an expiration time. The processor is configured to control a rate of sale in order to sell out the items available in a limited quantity by the expiration time and to price the items available in a limited quantity so as to deplete an inventory of the items available in a limited quantity by the expiration time.

RELATED APPLICATIONS

The present application is a continuation of pending U.S. patentapplication Ser. No. 11/981,052, filed Oct. 31, 2007, which is acontinuation-in-part of U.S. patent application Ser. No. 11/737,574 (nowU.S. Pat. No. 7,848,959), filed Apr. 19, 2007, which is a continuationof U.S. patent application Ser. No. 11/422,546 filed Jun. 6, 2006 whichis a continuation of U.S. patent application Ser. No. 10/084,777, filedFeb. 27, 2002 (now U.S. Pat. No. 7,080,030) which claimed the benefit ofcommonly owned U.S. Provisional Patent Application Ser. No. 60/272,130,filed Feb. 28, 2001, and U.S. Provisional Patent Application Ser. No.60/310,381, filed Aug. 6, 2001, all of which are hereby incorporated byreference in their entirety.

SUMMARY AND BACKGROUND

The present invention generally relates to purchasing systems, and morespecifically, but not exclusively, concerns a sales system adapted todynamically price goods and/or services over a computer network.

With the recent explosion in Internet commerce, the amount of stolen orpirated content has been on the rise. Encryption systems, such asSecured Digital Music Interface (SDMI), can be circumvented by hackersso that songs contained therein are freely available. For example,point-to-point (peer-to-peer) (P2P) programs, such as Napster andGnutella, have made it very easy for a person to copy copyrightedmaterial without compensating the author or artist. Consumers whodownload the pirated content believe that it is “free”; when inactuality they are “stealing” the author's work. Current intellectualproperty laws are not comprehensive enough and have not quickly adaptedto cover this developing technology. Since intellectual property rightsvary internationally, enforcement of those rights across nationalboundaries can be difficult. Although suits against P2P providers, suchas Napster, have been successful, the cost and time involved inachieving a successful result can be prohibitive. Moreover, systems likeGnutella do not require a central index server for maintaining a list ofusers. This decentralized approach makes it nearly impossible toshutdown such systems since there is no central operator to target forsuit. Pursuing legal remedies against individual users who breakcopyright laws only antagonizes the public further and creates furtheranimosity towards the recording, movie, software and publishingindustries.

Due to their popularity, the P2P swapping services, like Napster andGnutella, have dramatically increased network loads of institutionswhere such services are extremely popular, like colleges anduniversities. To combat the increased network loads, universities havedenied students access to such services across their networks. Thus,these services are severely hampered in contacting an extremelydesirable demographic of consumers, students.

Therefore, there has been a long-felt need for a system to providedigital media priced so that content suppliers can make a profit, and atthe same time provide an incentive for consumers to purchase and notsteal content.

According to one aspect of the disclosure, a dynamic pricing system forpricing items for sale by a seller which items are available in alimited quantity comprises a pricing server and various types of datastored in memory. The pricing server includes memory, a processor and aclock. One type of data stored in memory is indicative of the initialquantity of an item available in a limited quantity. Another type ofdata stored in memory is indicative of the current remaining quantity ofthe item available in a limited quantity. Yet another type of datastored in memory is indicative of an expiration time at which it isdesired that all of the item available in a limited quantity be sold.The processor is configured to price the item available in a limitedquantity so as to deplete the inventory of the item available in alimited quantity by the expiration date based in part by accessing thememory to retrieve the data indicative of the initial quantity, thecurrent remaining quantity and the expiration time and accessing theclock.

Other forms, embodiments, objects, features, advantages, benefits, andaspects of the present invention shall become apparent from the detaileddrawings and description contained herein.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 shows a diagrammatic view of a communication system that includesa dynamic pricing system according to one embodiment of the presentinvention.

FIG. 2 shows a diagrammatic view of a communication system that includesa dynamic pricing system according to another embodiment of the presentinvention.

FIG. 3 shows a diagrammatic view of a table structure for the FIG. 2dynamic pricing system.

FIG. 4 is a flow diagram illustrating process for dynamically pricingand providing content according to one embodiment of the presentinvention.

FIG. 5 shows a main display screen for the dynamic pricing system.

FIG. 6 shows a registration display screen for the dynamic pricingsystem.

FIG. 7 shows a user agreement display screen for the dynamic pricingsystem.

FIG. 8 shows a registration completed display screen for the dynamicpricing system.

FIG. 9 shows a sign-in display screen for the dynamic pricing system.

FIG. 10 shows a registered user main display screen for the dynamicpricing system.

FIG. 11 is a flow diagram illustrating a process of crediting a useraccount according to one embodiment of the present invention.

FIG. 12 shows a billing display screen for the dynamic pricing system.

FIG. 13 shows an update user profile display screen for the dynamicpricing system.

FIG. 14 shows a purchase history display screen for the dynamic pricingsystem.

FIG. 15 shows a charge credit card display screen for the dynamicpricing system.

FIG. 16 shows a search display screen for the dynamic pricing system.

FIG. 17 shows a search results display screen for the dynamic pricingsystem.

FIG. 18 shows a media type display screen for the dynamic pricingsystem.

FIG. 19 shows a music category display screen for the dynamic pricingsystem.

FIG. 20 shows a genre display screen for the dynamic pricing system.

FIG. 21 shows a musical artist display screen for the dynamic pricingsystem.

FIG. 22 shows an album display screen for the dynamic pricing system.

FIG. 23 shows a details display screen for the dynamic pricing system.

FIG. 24A shows a purchase content display screen for the dynamic pricingsystem.

FIG. 24B shows a download display screen for the dynamic pricing system.

FIG. 25 is a flow diagram illustrating a process for dynamically pricingan item according to one embodiment of the present invention.

FIG. 26 is a flow diagram illustrating a process for dynamically pricingan item according to another embodiment of the present invention.

FIG. 27 is a flow diagram illustrating a process for dynamically pricingan item according to a further embodiment of the present invention.

FIG. 28 shows a diagrammatic view of data flow between navigationservlets in the FIG. 2 system.

FIG. 29 shows a diagrammatic view of data flow between file servlets inthe FIG. 2 system.

FIGS. 30A 30E show a diagrammatic view of data flow between databaseservlets in the FIG. 2 system.

FIG. 31 is a flow diagram illustrating a technique for registering andcompensating content suppliers according to one embodiment of thepresent invention.

FIG. 32 shows an artist agreement and release display screen for thedynamic pricing system.

FIG. 33 shows a content pricing and download display screen for thedynamic pricing system.

FIG. 34 is a flow diagram illustrating a technique for providingincentives in order to gain access to institutional networks accordingto one embodiment of the present invention.

DETAILED DESCRIPTION

For the purposes of promoting an understanding of the principles of theinvention, reference will now be made to the embodiments illustrated inthe drawings and specific language will be used to describe the same. Itwill nevertheless be understood that no limitation of the scope of theinvention is thereby intended, such alterations and furthermodifications in the illustrated device, and such further applicationsof the principles of the invention as illustrated therein beingcontemplated as would normally occur to one skilled in the art to whichthe invention relates.

FIG. 1 depicts a communication system 100 according to one embodiment ofthe present invention in a diagrammatic form. The communication system100 includes a dynamic pricing system 102, an administrative computer104, a network 106, and one or more user computers/devices (clients)108. An administrator of the dynamic pricing system manages the dynamicpricing system 102 with the administrative computer 104. As illustrated,the administrative computer 104 is operatively coupled to the dynamicpricing system 102, and the dynamic pricing system 102 is operativelycoupled to the other systems through the network 106. As should beappreciated, administrative computer 104 can also be operatively coupledto system 102 through the network 106. Although only one administrativecomputer 104 is shown in FIG. 1, it should be understood that system 100can include multiple administrative computers 104. The administrativecomputer 104 can include a personal computer, a computer terminal, apersonal digital assistant (PDA) and/or other types of devices generallyknown to those skilled in the art. In one embodiment, administrativecomputer 104 is a personal computer.

The dynamic pricing system 102 stores, dynamically prices, and deliversmedia content items to the clients 108 over the network 106. The dynamicpricing system 102 is also operable to receive media content from theclients 108. This media content can include, but is not limited to,music, books, movies, videos, television shows, software, coupons,tickets, web pages, magazines, newspapers, and other types of electronicmedia. As should be appreciated from the discussion below, the dynamicpricing system 102 can be adapted to dynamically price goods and/orservices, such as electronics and repair services. For instance, thesegoods and/or service items can include, but are not limited to, compactdiscs, digital versatile discs, electronic products, household products,jewelry, furniture, telephone services, and the like. It should beappreciated that such items, when purchased, can be deliveredelectronically over the network 106 and/or physically delivered, forexample by a postal carrier. As illustrated, the dynamic pricing system102 includes a processor 110, a clock 111 and memory 112. The dynamicpricing system 102 can be located on a single server or distributed overseveral servers. In one embodiment, the dynamic pricing system 102 isincorporated into one or more web servers. The processor 110 is used tocontrol the operation of the dynamic pricing system 102. The processor110 may be comprised of one or more components. For a multi componentform of processor 110, one or more components may be located remotelyrelative to the others, or configured as a single unit. Furthermore,processor 110 can be embodied in a form having more than one processingunit, such as a multi-processor configuration, and should be understoodto collectively refer to such configurations as well as asingle-processor-based arrangement. One or more components of theprocessor 110 may be of electronic variety defining digital circuitry,analog circuitry, or both. Processor 110 can be of a programmablevariety responsive to software instructions, a hardwired state machine,or a combination of these. The clock 111 is used to time events in thedynamic pricing system 102. As should be appreciated, the clock 111 canbe incorporated into the processor 110 or can be a stand-alonecomponent. Further, the clock 111 can be hardware and/or software based.Among its many functions, the memory 112 in conjunction with theprocessor 110 is used to store media content and manage sales. Memory112 can include one or more types of solid state memory, magneticmemory, or optical memory, just to name a few. By way of nonlimitingexample, the memory 112 can include solid state electronic random accessmemory (RAM), sequential access memory (SAM), such as first-in,first-out (FIFO) variety or last-in, first-out (LIFO) variety,programmable read only memory (PROM), electronically programmable readonly memory (EPROM), or electronically erasable programmable read onlymemory (BEPROM); an optical disc memory (such as a DVD or CD-ROM); amagnetically encoded hard disc, floppy disc, tape, or cartridge media;or a combination of these memory types. In addition, the memory 112 maybe volatile, non-volatile, or a hybrid combination of volatile,non-volatile varieties. In the illustrated embodiment, the memory 112further includes removable memory 114. The removable memory 114 can bein the form of a non-volatile electronic memory unit, optical memorydisk (such as a DVD or CD-ROM); a magnetically encoded hard disk, floppydisk, tape, or cartridge media; or a combination of these or otherremovable memory types.

Network 106 can include the Internet, one or more other wide areanetworks (WAN), a local area network (LAN), a proprietary network suchas provided by America Online, Inc., an institutional network, a cabletelevision network, a public switched telephone network (PSTN), acombination of these, and/or other types of networks generally known tothose skilled in the art. In one form of the present invention, thenetwork 106 includes the Internet. In the illustrated embodiment, thenetwork 106 further includes an institutional network 115. As should beappreciated that the network 106 can include more than one institutionalnetwork 115. The institutional network 115 is maintained byinstitutions, such as colleges, universities, high schools, technicalschools, other types of learning institutions, and/or charitableorganizations. As shown, client devices 108 are operatively coupled tothe network 106. Users access the dynamic pricing system 102 through theclient devices 108. The clients 108 and the dynamic pricing system 102communicate with one another by sending signals across the network 106.In one form, these signals can include HyperText Mark Up Language (HTML)pages, Extensible Mark Up Language (XML) Page, and other typestransmission protocols. For example, the dynamic pricing system 102 cansend a signal corresponding to a web page form across the network 106 tothe client 108. The user with client 108 can fill out the form and senda signal corresponding to the filled-out form across the network 106 tothe dynamic pricing system 102. By way of non-limiting examples, theclients 108 can include personal computers, both fixed and portable;computer terminals; PDA's; cellular telephones, land line basedtelephones and the like; television systems, such as televisions,television-based web browsers, digital video recorders, analog videorecorders, cable boxes, cable modems, direct broadcast satellite (DBS)boxes, digital versatile disc (DVD) players and video game systems; homeentertainment systems, such as stereo equipment, MP3 players, and thelike; sound production equipment; video/movie production equipment; or acombination these components, to name a few examples. As shown, theclients 108 are operatively coupled to the dynamic pricing system 102over the network 106. It should be appreciated that the clients 108 canbe operatively coupled to the dynamic pricing system 102 throughhardwired and/or wireless connections. The clients 108 are hardwiredand/or have software that allows the clients 108 to communicate over thenetwork 106. In one embodiment, the clients 108 are personal computerswith software that can include email applications, web browsers, chatprograms, and/or proprietary software.

Users of the dynamic pricing system 102 can be further categorized intotwo types of users, mainly: content suppliers (or artists) and contentconsumers (or customers). For example, content suppliers can include,but are not limited to, artists, authors, directors, programmers,producers, actors, performers, publishers, movie/television studios,music labels, copyright holding organizations such as the RecordingIndustry Association of America (RIAA), and their agents. As should beappreciated, the same user of the dynamic pricing system 102 can be acombination of both types, such that they can take the role of beingboth a content supplier and consumer. As shown, the clients 108 caninclude one or more content supplier computers/devices 116. The contentsupplier computer 116 can include, but is not limited to, any of thedevices that were described above for the clients 108. With contentsupplier computer 116, a content supplier can post media content forsale on the dynamic pricing system 102. The media content can come froma source outside of computer 116, or an artist can generate the contentwith the content supplier computer 116 and/or peripheral devices 118that operatively coupled to the content supplier computer 116. Theseperipheral devices 118 can include, but are not limited to, electronickeyboards, digital cameras, scanners, video cameras, video productionequipment, sound production equipment, PDA's, portable computers, andother types of content producing equipment. For example, in theillustrated embodiment, the artist can use a camera 120 to create stillphotographs, movies and videos. Further, in the illustrated embodiment,the artist can create music with keyboard 122 and can create software ortext with the content supplier computer 116. Although a single contentsupplier computer 116 is illustrated in FIG. 1, it should be appreciatedthat system 100 can include multiple content supplier computers 116.Content suppliers can sell individual items and/or bundle multiple itemsfor sale on the dynamic pricing system 102. For example, the dynamicpricing system 102 can sell one song and two pictures collectively for asingle price. In another example, two pictures can be bundled togetherand sold at a single price on the dynamic pricing system 102.

The clients 108 further include customer devices 124. It should beunderstood that customer devices 124 can include, but are limited to,the devices as described above for the clients 108. As shown, thecustomer devices 124 can further include institutional member devices125. Institutional members, such as students and teachers, areoperatively coupled to the dynamic pricing system 102 through theinstitutional network 115. With customer devices 124, consumers canpurchase and download content from the dynamic pricing system 102.Consumers can view, listen to and/or interact with the content theypurchased with customer devices 124. For example, when the customerdevice 124 is a personal computer, the personal computer can be used tostore compressed digital media musical content, such as MP3 files. Thepersonal computer then can be used to play, store, and/or “burn” CDswith music from the MP3 files. In the illustrated embodiment, a consumercan download a book with customer device 124 and print out the book witha printer 125 that is operatively coupled to the customer device 124.Alternatively or additionally, the consumer can download the purchasedcontent to one or more portable devices 126. These portable devices 126can include, but are not limited to, portable music players (such as MP3players), PDA's, cellular telephones, portable televisions, portablecomputers, hand held games, e-book readers and/or a combination of thesedevices. As shown, the portable devices 126 can be operatively to thecustomer devices 124 in order to download the purchased content. Theportable devices 126 can also be operatively coupled to the network 106through a wireless network connection. For example, a portable musicplayer 128, such as an MP3 player, can download purchased songs from thecustomer device 124. It should be understood that dynamic pricing system102 is not limited to a specific file format, such as the MP3 format formusic. Rather, the dynamic pricing system 102 is able to accommodate awide range of file formats such as WAV and SDMI complaint files formusical works and ASCII and portable document format (PDF) files fortext, for example. In the illustrated embodiment, a consumer withcustomer device 124 can download a purchased book, software program,song, and/or movie to a PDA 130. Moreover, the portable devices 126 canbe operatively coupled to the network 106 in order to directly purchaseand receive content from the dynamic pricing system 102. As illustrated,a wireless PDA or cellular telephone 132 can purchase and downloadcontent directly from the dynamic pricing system 102. In another exampleillustrated in FIG. 1, a customer can purchase dynamically priced moviesor television shows with a television 134. In this example, the customerpurchases the program from the dynamic pricing system 102 through theInternet, a cable system and/or a direct broadcast satellite (DBS)system (network 106). Payments for content purchased on the dynamicpricing system 102 can be handled internally and/or handled by a thirdparty system. In one embodiment, a third party payment service 136 isused process customer payments for downloaded content. In one form, thethird party payment system 136 includes Verisign's PayFlow system.

A detailed illustration of one of many embodiments of the dynamicpricing system 102 is illustrated in FIG. 2. As shown, system 200includes the dynamic pricing system 102 and one or more clients 108.Although not illustrated in FIG. 2, the client computer 108 in the FIG.2 embodiment is operatively coupled to the dynamic pricing system 102through the network 106 in the same manner as illustrated in FIG. 1. Inone form, the network 106 for the FIG. 2 dynamic pricing system 102includes the Internet. The dynamic pricing system 102 in the FIG. 2embodiment includes one or more connection servers 202, one or morenavigation servers 204, one or more heartbeat (load balancing) servers206, one or more database servers 208, one or more file servers 210, oneor more master database servers 212, and one or more master file servers214. Although servers 202, 204, 206, 208, 210, 212 and 214 areillustrated as separate units, it should be understood that selectedservers or all of the servers can be combined to form a single unit. Inone form, the dynamic pricing system 102 utilizes the Linux operatingsystem with programs coded in the JAVA language. As should beappreciated, the dynamic pricing system can use other operating systems,such as UNIX, Windows and Apple Macintosh operating systems, to name afew. Further, the software in the dynamic pricing system 102 can beprogrammed in other languages besides JAVA, such as C++, Visual Basic,Fortran, Pascal, CGI and PERL, to name a few.

As illustrated, the heartbeat server 206 is operatively coupled to theconnection server 202, the navigation servers 204, the database servers208, and the file servers 210 in order to monitor their load. Theconnection server 202 is operatively coupled to the navigation servers204. The navigation servers 204, the database servers 208 and fileservers 210 are operatively coupled to with one another. The heartbeatserver 206 monitors the performance of the other servers and loadbalances the dynamic pricing system 102. Periodically, servers 202, 204,208 and 210 individually send their load status information to theheartbeat server 206. With the collected status information, theheartbeat server 206 is able to load balance servers 202, 204, 208 and210. If the heartbeat server 206 does not receive a status signal fromone of the servers 202, 204, 208 or 210, the heartbeat server 206concludes that the server is offline, or otherwise unavailable, anddirects the requests to the remaining servers. For example, when one ofthe database servers 208 goes offline, the heartbeat server 206 canroute requests to the remaining database servers 208. Each serverreceives load information about the other servers from the heartbeatserver 206. Based on this load information, a server can send processingrequests to a server with the lowest load in order to improve theoperational efficiency of the dynamic pricing system 102.

The connection server 202 is operatively coupled to the clients 108 overthe network 106. The connection server 202 receives and processes allrequests from the clients 108. When a request is received, theconnection server 202 queries the heartbeat server 206 to find anavailable navigation server 204 with the lowest load. The connectionserver 202 then forwards the request to the navigation server 204 withthe lowest load. Based on the request and the load information from theheartbeat server 206, the navigation server 204 determines theappropriate database server 208 and/or file server 210 to contact inorder to process the request.

The file servers 210 store the media content that is for sale on thedynamic pricing system 102. As illustrated, the file servers 210 canmaintain different media types on separate servers. For example, thefile servers 210 can include one or more movie servers 216, one or morebook/text servers 218, one or more music servers 220, one or moresoftware servers 222, and one or more photograph/picture servers 224.However, it should be understood that the different media types can bestored on a single server or combined on an array of servers. In theFIG. 2 embodiment, movies, videos, shows, and the like are store onmovie servers 216. As shown in the illustrated embodiment, there arethree movie servers, first 216 a, second 216 b and 216 c third movieservers. Books, poems, short stories, manuals, news articles and othertypes of text are stored on the books server 218. The music servers 220store music, songs, lyrics, sound recordings and the like. In theillustrated embodiment, the music servers 220 include a first musicserver 220 a and a second music server 220 b. Software and pictures arerespectively stored in the software server 222 and the photograph server224. The master file server 214 maintains masters of the files stored onthe file servers 210 and periodically updates the files stored on thefile servers 210. In one form, so as to minimize the risk of corruption,the master file server 214 is offline with respect to the file server210 and only connects to the file servers 210 when updating the files onthe file servers 210.

Depending on popularity, multiple copies of the same work (file) can bestored on multiple file servers 210. Initially, a file containing thework (content) is loaded onto one of the files servers 210, whichbecomes the “home” file server 210 for the work. For example, duringinitialization of the dynamic pricing system 102, a song is loaded fromthe master file server 214 onto the second music server 220 b, whichbecomes the “home” music server 220 for this particular song. As thesong becomes popular, the second music server 220 b can place a copy ofthe file containing the song onto the first music server 220 a so as tooptimize performance of the dynamic pricing system 102. All requests forthe song are initially placed with the “home” music server 220, which isthe second music server 220 b in this example, and if the second, homemusic server 220 b is unable to process a request for the song, thesecond music server 220 b redirects the request to one of the othermusic servers 220 that has a copy of the song, which in this case is thefirst music server 220 a. Since all requests for downloading of acontent file are first placed with the home file server 210, the homefile server 210 is able to track and record the number of times theparticular content file has been purchased and downloaded. The home fileserver 210 also perform keeping functions by removing copies of lesspopular works from the other file servers 210 in order to conserve spacein memory 112. Using the same example, once the song becomes lesspopular, the second, home music server 220 b can delete the copy of thesong from the first music server 220 a. In one embodiment, differentworks can have different home file servers 210. Returning to the sameexample, while the second music file server 220 b was the home fileserver 210 for the first song, the first music file server 220 a can bethe home file server 210 for a second, different song. In anotherembodiment, all of the works for a particular type of work (music,books, movies, etc.) can have one file server 210 designated as the homefile server 210. For example, in this embodiment, all of the songsloaded into the dynamic pricing system 102 can have the first music fileserver 220 a as their “home” file sever 210.

The database servers 208 store information about the content stored onthe file servers 210 and information about users of the dynamic pricingsystem 102, both customers and artists. This information is stored inone or more databases 225 on the database servers 208, and thisinformation can include, but is not limited to, the name/address of the“home” file server 210 for the works; the names of the artists, authors,directors, actors and/or owners of the works; titles; publishers;producers; type of work, such as music, text or video; work category(drama, humor, rock, jazz . . . ); subject; pricing information andsize/length of the work. The databases 225 on the database servers 208can be a standard file, a combination of files, a standard databaseprogram, a relational database, a SQL (Structured Query Language)database, and/or other types of data storage structures as generallyknown by those skilled in the art. In one embodiment, the databases are225 on the database servers 208 are PostGreSQL databases. As should beappreciated, the databases 225 on the database servers 208 can be othertypes of database, such as an Oracle or Microsoft SQL Server typedatabases. In the illustrated embodiment, the database servers 208 havemultiple databases 225 organized by content type. For example, thedatabases 225 can include one or more movie databases 226; one or morebook/text databases 228; one or more music databases 230; one or moresoftware databases 232; one or more photograph/picture databases 234;one or more user databases 236; and/or one or more artist informationdatabases 238. The databases 225 can be active as separate databaseinstances on a single database server 208 or on separate databaseservers 208. In the illustrated embodiment, the databases 225 aremaintained on separate database servers 208. To improve performance, thedatabase servers 208 in one embodiment contain multiple, redundantcopies of the same database 225.

In the illustrated embodiment, the database servers 208 in FIG. 2 havethree movie databases 226 stored on separate database servers 208 thatcontain the same information. The movies databases 226 containinformation about the movies, videos and/or shows stored in the moviefile servers 216. For instance, the movies databases 226 can store thefile name along with the name/address of the home movie file server 216;file size; title; writer; director; actors; producers; writers;distributors; movie category, such as drama or action; description;comments; reviews; pricing and demand information; and/or length of thework. The books databases 228 maintain information about the text storedin the books file servers 218. For example, the books databases 228 canstore the file name along with the home book file server 218 for a work;file size; the title; author; owner; publisher; distributor; picture ofthe author and/or book cover; category, such as biography or mystery;description; comments; reviews; pricing and demand information; and/orsize of the work. Similarly, the music databases 230 can store the filename of a song, the location of the file on the home music server 220,song title, artist, author, producer, distributor (label), album name,album picture, picture of the artist, musical category (i.e. rock, jazz. . . ), description, comments, pricing information, demand information,and/or length/size of the song along with other information relating tothe song. The software databases 232 and the picture databases 234respectively store information about the software stored on the softwarefile servers 222 and the pictures stored on the picture file servers224, and this information can include file name and home file serverinformation 210; pricing and demand information; titles; size; category;owner and/or authorship. Information about the particular users of thedynamic pricing system 102, both customers and artist, is maintained inthe users databases 236. The information in the users databases 236 canbe used control access to the dynamic pricing system 102 and maintainbilling information. Examples of such information include the usernameand password; first and last names; home and business addresses; emailaddresses; telephone numbers; session identifiers (ID's) and othersession information; and billing and account balance information, toname a few. Biographical and other types of artist information ismaintained one the artists databases 238. It should be understood thatthe above-described databases 225 can include additional informationand/or omit certain information.

The master database server 212 maintains masters of the databases 225stored on the database servers 208 and periodically updates thedatabases 225 stored on the database servers 208. In one form, so as tominimize the risk of corruption, the master database server 212 isoffline with respect to the database servers 208 and only periodicallyconnects to the database servers 208 when updating the databases 225.

All requests, such as a web page requests, from the client 108 (asindicated by arrow 250 in FIG. 2) are routed to the connection server202. Based on load information from the heartbeat server 206, theconnection server 202 routes the request, as indicated by arrows 252 and254, to the navigation server 204 with the lowest load. In oneembodiment, for each subsequent action by the user, the heartbeat server206 remembers which server was previously used and routes the user tothe same server. The navigation server 204 processes the requests. Forinstance, the navigation server 204 can query one of the databases 225,as shown by arrow 256, in order to process the request. The navigationserver 204 selects the particular database server 208 based on theinformation required (i.e. information about music, books etc.) and theload information from the heartbeat server 206. As depicted by arrow258, the results from the query are returned to the navigation server204 that sent the query. Based on the results, the navigation server 204generates a web page and sends the page to the client 108, which isdepicted by arrow 260. In another example, the navigation server 204processes a purchase/download request from the client by sending therequested file name to the home file server 210 for the particular file,which is indicated by arrow 262. As depicted by arrow 264, the fileserver 210 transfers the file to the client 108.

A table structure 300 of database tables 302 in the databases 225according to one embodiment of the present invention is illustrated inFIG. 3. As should be appreciated, the databases 225 can have differenttables 302 and/or table structures 300 than the one shown. The tables302 in the databases 225 include a media information table 304, apricing table 306, a keyword table 308, an artist table 310, an accounttable 312, and a session table 314. The media information table 304stores information about the media content stored on the file servers210. In one embodiment, the movie 226, books 228, music 230, software232, and photograph 234 databases each include one or more mediainformation 304, pricing 306 and keyword 308 tables. The mediainformation tables 304 includes a number of fields 316 that containinformation about a particular media content item. As shown, the fields316 in the media information table 304 can include a media ID field 318for storing a unique identifier for an item; a media name field 320,which for example stores the name of the movie, song, program, etc.; anartist/author name field 322 in which the name of the artist isidentified; and an artist ID field 324 which contains a uniqueidentifier for individual artists on the dynamic pricing system 102. InFIG. 3, asterisked (“*”) fields in the tables 302 are the fields bywhich the individual tables 302 are indexed. For instance, the mediainformation table 304 is indexed by the media ID field 318. Categoricalinformation, such as the album name and/or the type of music, can bestored in field 326. The filename, path and/or Internet Protocol (IP)address for an image related to the particular content is stored infield 328. For example, field 328 can contain the path and the file nameof an image of a book or an album cover. The physical length of theitem, such as the number of pages or playing time, is stored in field330, and the file size of the item is stored in field 332. The file nameand address, such as the path and/or IP address of the home file server210, of the item is listed in field 334. The price model for dynamicallypricing the item, the initial price for the item, and the implicit ormarginal cost of the item are stored in fields 336, 338 and 340,respectively. Fields 342, 344 and 346 respectively store the minimumprice for the item, the maximum price for the item and the current pricefor the item. The current demand, or the number of times the item waspurchased within a specified period, is maintained in field 348. A countcache field 350 stores the number of purchases of the item since thelast time the current demand was determined. Pricing algorithmparameters field 352 can store information such as the historicalpricing and quantity ordered information for the item. In one form,field 352 stores the price and corresponding demand for the item overthe last seven periods. It should be appreciated that depending on thedynamic pricing technique used, field 352 can store other parameters,such as the time between purchases.

The pricing table 306 stores information related to the price ofparticular media content items. The pricing table 306 includes media IDfield 318 for identifying the particular item. The date/time, the priceat that time, and the quantity demand at that time for the itemidentified by the media ID field 318 are stored in fields 354, 356 and358, respectively. The keyword table 308 is used for searching andlocating records of items in the databases 225 by keywords. In keywordtable 308, the keywords are stored in field 360 and the media ID of therecord that contains the keywords is stored in the media ID field 318.The artist table 310 is maintained in the artist database 238 andcontains information about artists, authors, performers, directors,producers, and the like. The artist ID field 324 is a unique identifierfor the artist. The username and artist name are respectively stored infields 362 and 322 in table 310. A description of the artist and theirwork is maintained in field 364. The address to the web site for theartist is stored in field 366.

As illustrated in FIG. 3, account information for the users of thedynamic pricing system 102, both customers and suppliers, is maintainedin account table 312. In one form, the account information table 312 ismaintained in each user database 236. It should be appreciated that theuser information in table 312 can be encrypted in order to ensureprivacy. In table 312, the username and password for accessing thedynamic pricing system are maintained in fields 362 and 368,respectively. As shown, the first name and last name of the user isstored in fields 370 and 372, respectively. The street address of theuser is stored in fields 374 and 376. The city, state, zip code,country, email address, and telephone number of the user are stored infields 378, 380, 382, 384, 386 and 388, respectively. The accountbalance of the user is maintained in field 390. Information about useraccess to the dynamic pricing system 102 is maintained in the sessiontable 314. In one form of the present invention, the session table 314is stored in the user database 236. As should be appreciated, thesession table 314 can be stored in other databases 225. The sessiontable 314 stores a unique session ID in field 392 and the username infield 362. The date/time of the session is maintained in field 394. Thetables 302 are linked to one another by various fields 316. Forinstance, the pricing 306 and keyword 308 tables can be linked to themedia information table 304 via the media ID field 318. The session 314and account 312 tables are linked to one another by the username field362. The artist table 310 can be linked to table 304 via the artist IDfield, and the artist table 310 can be linked to the account table viathe username field 362.

In another embodiment of the present invention, the dynamic pricingsystem 102 is configured to dynamically price P2P transactions. In thisembodiment, as shown in FIG. 1, the content is stored across multiplecontent supplier computers 116. The content supplier registers theircontent for sale on the dynamic pricing system 102, and the dynamicpricing system 102 dynamically prices the content. When an item ispurchased, the content supplier computer/device 116 that has the itemtransfers the file containing the item directly over the network 106 tothe customer device 124. For example, in one form of this embodiment,the content supplier computers 116, which are remotely distributedacross the network 106, act like the file servers 210 of FIG. 2; whilethe database servers 208 remain centrally located in the manner asillustrated in FIG. 2. Like the other embodiments, the database servers208 track the purchases made and administer user accounts. Moreover, thedatabases 225 store the file names of the content items for sale alongwith the corresponding addresses (paths) of the content suppliercomputers 116 that store the file. For example, the file server field334 in the media information table 304 of FIG. 3 can store the file nameand IP address of the content supplier computer 116. As should beappreciated, the dynamic pricing system 102 according to this embodimentprovides a centralized access point for conducting and administeringsearches. In a further form, the dynamic pricing system 102 provides amechanism, such as keys for encrypted content, for unlocking downloadedfiles and certifying that the downloaded file is correct. It should beappreciated that the propagation technique for popular downloads, asdescribed above for the file servers 210, can also be used with thecontent supplier computers 116 in the P2P embodiment.

A technique for dynamically pricing and providing content, according toone embodiment of the present invention, is illustrated with flowdiagram 400 in FIG. 4. In stage 402, the customer with customer device124 registers with the dynamic pricing system 102. Alternatively, if thecustomer has already registered with the dynamic pricing system 102, thecustomer can directly login to the dynamic pricing system 102. In oneform, the client 108 has proprietary client software for interactingwith the dynamic pricing system 102. In another form of the presentinvention, which is described below, the client 108 includes a webbrowser for interacting with the dynamic pricing system 102. The webbrowser allows the customer and/or artist to view web pages from thedynamic pricing system 102 and to submit forms to the dynamic pricingsystem 102. As should be appreciated, the customer first accesses thedynamic pricing system 102 by entering and/or selecting the domain nameor the IP address of the dynamic pricing system 102 with the webbrowser. After accessing the dynamic pricing system, one of thenavigation servers 204 sends a main web page to the client 108.

An example of a main web page 500 is illustrated in FIG. 5. It should beappreciated that the web pages described below can omit certaininformation and/or include information. Furthermore, although theinterface describe below uses web pages, it should be appreciated thatother types interfaces can be used to interact with users of the dynamicpricing system 102. For instance, a proprietary interface, a menu typeinterface, a voice command interface, and/or other types of interfacesas generally known by those skilled in the art can also be used. Page500 includes a navigation toolbar 502, an advertisement portion 504, ageneral information portion 506, a new user button 508, a login portion510, an account information portion 511, and a search portion 512. Withthe navigation toolbar 502, the user can navigate between the variousweb pages of the dynamic pricing system 102. As illustrated, thenavigation tool bar 502 includes a welcome button 514, a new useraccount button 516, an account button 518, a sign in button 520, anartist registration button 522, a frequently asked question (FAQ) button524, a view media button 526, a music button 528, a video button 530, aphotograph button 532, a book button 534, a programs button 536, anadvanced search button 538 and an about button 540. Selecting thewelcome button 514 causes the main web page 500 to appear on the client108. As shown in FIG. 5, page pointer 541 is positioned next to thewelcome button 514 so as to indicate that the user is currently on themain web page 500. The user of the dynamic pricing system can create anew user account by selecting either the new user account button 516 orthe new account button 508, and can edit their account information byselecting the account button 518. The sign in button 520 allows the userto sign into the dynamic pricing system 102. With the artistregistration button 522, a content supplier, such as an artist, canregister with and/or receive information on how to register as a contentsupplier on the dynamic pricing system 102. A user can receive answersto questions by selecting the FAQ button 524. A customer can select theview media button 526 in order to view the different categories of mediacontent (music, movies, etc.) that are available on the dynamic pricingsystem 102. Alternatively, the user can directly access the music,videos/movies, photographs, text/book and software category screens,which list the content available, by selecting the music button 528, thevideo button 530, the photograph button 532, the book button 534 and theprogram button 536, respectively. The user can search for content on thedynamic pricing system 102 by selecting the advanced search button 538,and the user can retrieve general information about the dynamic pricingsystem, such as contact information, by selecting the about button 540.

Content suppliers on the dynamic pricing system 102 can advertise theirwork in the advertisement portion 504 of the main web page 500. Itshould be appreciated that other types of advertisements can bedisplayed in the advertisement portion 504. General information portion506 displays general information about the dynamic pricing system 102,such as operational status information and how to use the dynamicpricing system 102. As mentioned above, a new user of the dynamicpricing system 102 can register with the system 102 by either selectingthe new account button 508 or the new user button 516. After selectingeither button 508 or 516, the dynamic pricing system 102 sends to theclient 108 a registration form 600 (FIG. 6). As illustrated, theregistration form 600 includes a registration status portion 602 thatindicates the steps required to register with the dynamic pricing system102 and an information entry portion 604 in which user information isentered. The entry portion 604 includes a username field 606 in whichthe user can type in a username and one or more password fields 608 inwhich the user enters (and re-enters) password information. In entryportion 604, the user can enter their first name, last name, streetaddress, city, state, zip code, country, email address and telephonenumber into fields 610, 612, 614, 616, 618, 620, 622, 624 and 626,respectively. After the information is entered into entry portion 604,the user can submit the registration form 600 to the dynamic pricingsystem 102 by selecting a next button 628. As should be appreciated, theclient 108 (through applets in the form) and/or the dynamic pricingsystem 102 can check for errors (and/or missing information) in theregistration form 600. If the registration form 600 was not properlyfilled out, the dynamic pricing system 102 and/or client 108 can askthat the information be corrected and resubmitted.

After the registration form 600 is submitted, the dynamic pricing system102 sends a user agreement form 700 to the client 108. As shown in FIG.7, the user agreement form 700 includes an agreement text portion 702 inwhich the text of the agreement is displayed and an assent button 704.The user agrees to the terms of the user agreement by selecting theassent button 704. The user information is then stored in the userdatabase 236, and a registration completion form 800, which isillustrated in FIG. 8, is displayed on the client 108. Subsequently, auser can access the dynamic pricing system 102 by manually logging ontothe dynamic pricing system 102. The user can also be automaticallylogged onto the dynamic pricing system 102 with a user identifier, suchas a “cookie”, that is stored on the client 108. Referring again to FIG.5, the user can enter their username and password in fields 542 and 544,respectively, and select sign in button 546 to log into the dynamicpricing system 102. Alternatively, the user can select the sign inbutton 520 on the navigation tool bar 502 in order to be shown a sign inform 900, which is illustrated in FIG. 9. The user can then enter theiraccount information into fields 542 and 544, and select the sign inbutton 546 to log into the dynamic pricing system 102.

After logging into the dynamic pricing system 102, the user is shown aregistered user main page 1000, which is depicted in FIG. 10. As shown,the registered user main page 1000 contains similar portions and buttonsas shown in the main page 500 of FIG. 5, with the exception that theregistered user main page 1000 does not have the login portion 510 andthe account information portion 511 lists the particular accountinformation of the current user. In the illustrated embodiment, theaccount information portion 511 includes a username identifier 1002,which identifies the current user, and an account balance 1004, whichindicates the amount of money the current user has in their the dynamicpricing system account.

Initially, when the user registers with the dynamic pricing system 102their account balance 1004, which is stored in field 390 of the accounttable 312, is zero-dollars ($0.00). Although dollars are used whendescribing the account balance 1004 of the user in one embodiment, itshould be appreciated that different currencies can be used in theaccount balance 1004, such as the Euro and the yen. With a zero ($0.00)account balance 1004, the user can still use the dynamic pricing system102. For example, an artist does not need money in order to supplycontent to the dynamic pricing system 102. In another example, even witha zero account balance, a customer can download free content from thedynamic pricing system 102. In the illustrated embodiment, a customerpre-deposits money into an account from which their purchases arededucted. By pre-depositing money into an account, purchases on system102 occur quickly and the purchasing experience for the user is similarto the “free” systems, such as the Gnutella. The customer can add moneyto their account in a number of ways including, but not limited to:payments through credit or debit cards; wire transfers; being billed;sending cash, checks or money orders to administrator of the dynamicpricing system 102; and/or transacting payments through the third partypayment service 136, such as Verisign's PayFlow system or PayPal.com'ssystem, to name a few. In another embodiment, a customer does notmaintain an account balance, but rather pays for each individualpurchase at the time of the purchase.

A flow diagram 1100 for illustrating one technique for adding money toan account in the dynamic pricing system 102 according to one embodimentof the present invention is shown in FIG. 11. In stage 1102, the dynamicpricing system 102 sends to the client 108 one or more forms forcrediting the account of the customer. To add money, the customerselects the my account button 518 on the navigation tool bar 502. Inresponse, the dynamic pricing system 102 sends to the client 108 abilling form 1200 (FIG. 12). Form 1200 includes a my account tool bar1202 and an add new card button 1204. The my account tool bar 1202allows the user to navigate through a number of forms related to theiraccount. The my account tool bar 1202 includes a profile form link 1206,a purchases form link 1208, and a billing form link 1210. With theprofile link form 1206, the user can edit their account profileinformation. As illustrated in FIG. 13, the account profile form 1300contains many of the fields shown in form 600 (FIG. 6) for entering userinformation, including fields 610, 612, 614, 616, 618, 620, 622, 624 and626. The account profile form 1300 further includes the my account toolbar 1202, a save button 1302 for saving any changes to the user database236 and a cancel button 1304 for not saving the changes. With thepurchases form link 1208, the user can view their past purchases onpurchase history form 1400 (FIG. 14). The purchase history form 1400includes a list 1402 of past purchases. This list 1402 can include dateof purchase 1404, title of content 1406 and price paid for the content1408.

The billing form 1200 (FIG. 12) is shown on the client 108 when thebilling form link 1210 is selected on the my account tool bar 1202. Onthe billing form 1200, the user can add money to their account byselecting the add new card button 1204. In response, the dynamic pricingsystem 102 sends to the client 108 a charge form 1500 (FIG. 15) in whichthe user can add money to their account by charging a credit card. Asshould be appreciated, a secure socket layer (SSL) can be used on theclient 108 for authentication purposes and to encrypt the credit cardinformation sent over the network 106. As shown, the charge form 1500contains fields 1502 for charging money to a credit card. To charge thecredit card, the user enters their first name, last name, streetaddress, city, state, zip code, country, credit card type, credit cardnumber, expiration date, amount to charge, email address and telephonenumber in fields 1504, 1506, 1508, 1510, 1512, 1514, 1516, 1518, 1520,1522, 1524, 1526 and 1528, respectively. In the charge field 1524, theuser enters the amount to add to their account balance, which is to becharged to the credit card. To charge the amount in the charge field1524 to the credit card, the user selects save button 1530, whichsubmits the information entered in form 1500 to the dynamic pricingsystem 102.

In the embodiment illustrated in FIG. 1, the dynamic pricing system 102incorporates client software from the third party payment system 136that handles the transactions for crediting money to the account of theuser. In one form, the third party payment system 136 is VeriSign'sPayFlow system and the third party client software is VeriSign's PayFlowclient software. As should be appreciated, other types of third partypayment systems 136 can be used.

In stage 1104 (FIG. 11), the dynamic pricing system 102 receives thecredit card billing information from the client 108, and in stage 1106,the dynamic pricing system 102 through the third party client softwareforwards the billing information to the third party payment system 136,which administers the transaction. The third party payment system 136collects the transaction information from the dynamic pricing system 102and then securely routes the transaction via a gateway through afinancial network to the appropriate bank, ensuring that user isauthorized to make the purchase. The third party client software in thedynamic pricing system 102 also sends an acknowledgement back to thethird party payment service 136 after returning the payment results tothe dynamic pricing system 102, in order to protect the user againstdouble billing due to latency or broken communication sessions. Itshould be understood that the dynamic pricing system 102 can send anerror message to the client 108, when the dynamic pricing system cannotcharge the credit card (i.e., not authorized to charge the credit cardor insufficient funds on the card). When the transaction is authorized,the dynamic pricing system 102 in stage 1108 updates the account balanceinformation stored in the user database 236 by adding the amount fromthe charge field 1524 to the account balance field 390 of table 312(FIG. 3). On the third party payment system 136, the funds for thetransaction are transferred to an account for the dynamic pricing system102. In another embodiment, the dynamic pricing system 102 directlyprocesses the transaction without using the third party payment system136.

In stage 404 (FIG. 4), the user can search for content of interest inthe dynamic pricing system 102. To perform an advance search forcontent, the user can select the advance search button 538 on thenavigation toolbar 502. As shown in FIG. 16, in response to theselection of the advanced search button 538, the dynamic pricing system102 sends an advanced search form 1600 to the client 108. The advancedsearch form 1600 includes the simple search portion 512 in which theuser can perform simple searches for content. The simple search portion512 includes a simple term entry field 1602, a media type drop-down list1604, and a simple search button 1606. The user enters one or moresearch terms into the simple term entry field 1602 and selects the mediatype to search (i.e. movies, books, and music) with the media typedrop-down list 1604. To submit the search to the dynamic pricing system102, the user selects search button 1606. Advanced search form 1600further includes an advanced search portion 1608 in which advancedsearches can be created. The advanced search portion 1608 includes asearch all field 1610, a media type field 1612, a genre field 1614,“specific field” search field(s) 1616, a maximum results drop-down list1618, a maximum amount field 1620, released after date drop-down lists1622, released before date drop-down lists 1624, a sort drop-down list1626, and an advanced search button 1628. It should be understood thatform 1600 can omit certain search criteria fields and/or includeadditional search criteria fields. In field 1610, the user can enter oneor more search terms that are searched throughout every field of thedatabase 225. The user can specify the media type and genre in drop-downlists 1612 and 1614, respectively. The user can search for terms inspecified fields, such as by title, with portion 1616. The maximumnumber of search results can be specified in drop-down list 1618, andthe maximum price for the content can be specified in field 1620. Thecontent can be searched by release dates of the content with drop downlists 1622 and 1624. The user can specify how the search results aresorted. The user submits the advanced search to the dynamic pricingsystem 102 by selecting search button 1628. Based on the search criteriaspecified, the dynamic pricing system 102 queries the databases 225stored in memory 112.

An example of a search results page 1700 is illustrated in FIG. 17. Asillustrated, the search results page 1700 includes a modify searchportion 1702 and a results portion 1704. With the modify search portion1702, the user can submit another search to the dynamic pricing system102. Portion 1702 has a search term field 1706 in which search terms areentered, a media type drop down list 1708 in which the type of media tobe searched is entered, and a search button 1710 for submitting thesearch. The results portion 1704 of the search results page 1700displays the results from the submitted search. Each row/record 1712 ofthe results portion 1704 contains information about an item, in thisexample a book, that matched the search criteria. As shown, each record1704 in the results portion 1704 can display an image 1714, a title1716, author 1718, file size 1720, and length 1722 of the work. In theillustrated example, image 1714 contains an image of the cover of thebook, and length 1722 lists the number of pages the book contains. Theresults portion 1704 further contains a title header 1724 that allowsthe user to sort the records 1712 by title when selected and an authorheader 1726 that allows the user to sort the records 1712 by author whenselected. The user can view additional details about the work byselecting a details link 1728 for the record 1712, and the user canpreview the work by selecting a preview link 1730 for the record 1712.The content listed in the record 1720 can be bought by selecting buylink 1732. As shown, buy link 1732 lists a current dynamic price of thecontent. By selecting link 1734, the user can purchase and download thework.

In addition, customers of the dynamic pricing system 102 can browsethrough hierarchical categories by selecting the view media button 526.In response to the selection of the view media button 526, the dynamicpricing system 102 sends to the client 108 a media types page 1800,which is shown in FIG. 18. As illustrated, the media types page 1800includes a music page link 1802, a text page link 1804, a videos pagelink 1806, a photograph page link 1808 and a software page link 1810that respectively link to a music page, a text page, a video/movie page,a photograph page and a software page. Alternatively, the user candirectly access the music page, the video/movie page, the photographpage, the text page and the software page by selecting the music button528, the videos button 530, the photographs button 532, the books button534 and the programs button 536, respectively. It should be appreciatedthat the user can access other types of media content using a similarinterface.

For example, when either the music page link 1802 or the music button528 is selected, the client 108 displays music page 1900. As shown inFIG. 19, the music page 1900 includes links 1902 that are organized bymusical genre, such as “jazz”, “funk” and “rock”, to name a few.Selecting one of the links 1902 will cause the client 108 to display apage organized specifically for the selected musical genre. Forinstance, if jazz link 1904 is selected, the dynamic pricing system 102will query the music databases 230 in order to generate a genre page2000 on the client 108. In FIG. 20, the genre page 2000 contains musicalartist links 2002 that allow the user to browse the musical works thatare available for sale from the listed artists. When one of the musicalartist links 2002 is selected, the dynamic pricing system 102 sends tothe client 108 a musical artist page 2100, which is shown in FIG. 21. Inthe illustrated embodiment, the artist page 2100 contains a name 2102 ofthe artist and album links 2104 that list the albums available from thatartist. When the customer selects one of the album links 2104, theclient 108 displays to the customer an album page 2200 (FIG. 22) thatincludes album (or CD) name 2202 and song links 2204 for songs on thatalbum.

As depicted in FIG. 23, a details page 2300 for a song is displayed onthe client 108 when the link 2204 for the song is selected. The detailspage 2300 can also be accessed by selecting the details link 1728 in thesearch results page 1700 (FIG. 17). As illustrated in FIG. 23, thedetails page 2300 includes: a type portion 2302 in which the type ofcontent, in this case “music”, is displayed; a title portion 2304 inwhich the title of the media content is listed, which in this example isthe song title; and an artist name portion 2306 in which the name of theartist is listed. The genre, such as jazz, for the content (song) isdisplayed in genre portion 2308, and any comments concerning the contentare displayed in comments portion 2310. The file size for the content isdisplayed in size portion 2312, and the length of the content isdisplayed in length portion 2314. In the illustrated embodiment, thefile size portion 2312 displays the file size of the song in megabytes(MB), and the length portion 2314 lists the length of the song inminutes. The details page 2300 can further include an image 2316 for thecontent, such as a picture of the album cover. The label for the albumis displayed in label portion 2318. The other content type pages (i.e.,the text page, the video/movie page, the photograph, and the softwarepage) contain similar hierarchical page formats for accessing content.

To receive a dynamic price for the content listed in the details page2300, the customer selects buy link 2320. In the illustrated embodiment,the customer receives a dynamic price for the song by selecting buy link2320, which sends a signal to the dynamic pricing system 102 thatindicates that the customer wants the current dynamic price for thesong. In response to receipt of this signal, the dynamic pricing system102 in stage 406 (FIG. 4) supplies a dynamic price for the song andgenerates a purchase window 2400 on the client 108 that lists thecurrent, dynamic price for the song. Purchase window 2400 is alsogenerated when the user selects the buy link 1732 in the search resultspage 1700 (FIG. 17). As illustrated in FIG. 24A, the purchase window2400 includes a message portion 2402 with a dynamic price 2404 for thesong, a purchase button 2406 in order to purchase the song, and a cancelbutton 2408 to not purchase the song. In the illustrated embodiment, thecustomer is given a specified time window to purchase the song. Afterthe period elapses, the purchase window 2400 automatically closes. Thepurchase window 2400 can also be closed by selecting the cancel button2408. In another embodiment, the dynamic pricing system 102 periodicallyrefreshes the price 2404 in the purchase window 2400. The price 2404 fora particular item, such as the song shown, and/or for a group of itemsis generated and dynamically adjusted by server 102. In one embodiment,the price is adjusted based on demand for the item so as to maximizeprofit. Generally, the greater demand for the particular item, server102 will increase the price until the profit is maximized, and when thedemand for the item is lower, the dynamic pricing system 102 lowers theprice until the profit is maximized. The price of a song can also bedynamically adjusted based on other factors such as the amount oftransfer time, the length of the song and overall quality of the song,to name a few factors. When the purchase button 2406 is selected, thedynamic pricing system 102 deducts the purchase price 2404 from theaccount of the user (see field 390) and the purchased item istransferred from the dynamic pricing system 102 to the customer device124 over the network 106 in stage 408. When the user does not haveenough money in their account, the dynamic pricing system 102 requeststhe user to deposit additional funds into their account beforedownloading the item. In one embodiment, the hypertext transfer protocol(HTTP) is used to download the item from the dynamic pricing system 102.In another embodiment, the file transfer protocol (FTP) is used todownload the item from the dynamic pricing system 102 to the client 108.As should be appreciated, items can be downloaded in other manners andusing other types of protocols. For example, in the above-described P2Pembodiment of the dynamic pricing system 102, the purchased item istransferred over the network 106 directly from the content suppliercomputer 116 to the customer device 124. During downloading, screen 2400is changed to downloading screen 2400 a (FIG. 24B), which indicates thedownload status of the item. Screen 2400 a contains a message portion2452 that displays the status of the download and a close button 2454for closing screen 2400 a. After the item is successfully downloaded,message 2452 indicates that the download process is complete. If thedownload is unsuccessful, message 2452 indicates that the download wasnot completed, and the dynamic pricing system 102 gives the customer acertain amount of time, such as two days, from the purchase to downloadthe item without being charged again for the item.

As should be appreciated, customers can access and purchase items on thedynamic pricing system 102 using other types of interfaces. For example,when the client 108 is a telephone, the customer can access and purchaseitems on the dynamic pricing system 102 through an automated voice menusystem (i.e. “The price is 33 cents. You have 1 minute to press 1 toconfirm your order or press 0 to cancel.”). When for example customersuse portable devices 126, a wireless protocol, such as WirelessApplication Protocol (WAP), can be used to interface with system 102.

Below a number of techniques for dynamically pricing items on thedynamic pricing system 102 will be described. The dynamic pricing system102 tries to optimize profit; this typically involves some estimation ofthe demand curve(s) for the items. The dynamic pricing system 102 indynamically pricing the media content actually never knows the demandcurve for an item for sale. Generally, the dynamic pricing system 102continues to raise the price for an item until total profits arereduced. Alternatively, system 102 will decrease the price of contentwhenever an increase in price reduces profits. A general description ofone embodiment of the pricing algorithm will now be described below. Inthis embodiment, the dynamic pricing system 102 through processor 1 10calculates price adjustments using a logarithmic demand curve that hasbeen found in empirical econometric studies to be the best fitting ofalgebraically tractable functional form for many retail markets. Thequantity of a particular item (q) purchased at a particular price (p) isassumed to take the form of equation 1 below:

Log [q]=α−βp  (Equation 1)

where

Log [ ] is a natural logarithm;

q=quantity of an item;

p=Price of the item; and

β, α.=parameters.

With Equation 1 above, parameters α and β are unknown. In order to solvethese parameters, the technique according to the present invention usesdata observed through sales of items to estimate these parameters.Another factor in determining the optimal price for an item is that thedemand curve for an item will change over time. Therefore, in oneembodiment, the dynamic pricing system 102 does not base its price uponvery old data. Still yet another obstacle the dynamic pricing system 102faces in determining pricing for a particular item is that customerdemand at the time periods in which a particular item is demanded variesdepending on the nature of a particular item. For example, a hit songmay have may sell a thousand copies a day. However, an obscure or oldsong to reach that level of sales may take a week, months, and/or evenyears. The profit (profit_(t)) made in a particular time period (T) isdescribed below in equation 2:

profit_(t) =q _(t)(P _(t−c))  (Equation 2)

where

t=time period;

profit_(t)=profit for a particular item at time period t;

q_(t)=quantity of items sold time period t;

P_(t)=price of the item at time period t; and

c=marginal cost.

It should be noted that for this embodiment the fixed costs such as costof the servers, employees and other resources are ignored in Equation 2.Equation 2 only considers the marginal cost (c) caused by changes insales volumes for a particular item. However, it should be understoodthat in other embodiments fixed costs can be a factor for dynamicallypricing an item. Other factors may be incorporated into Equation 2 inorder to determine the optimal profit. For example, if the time period(t) was twelve-hours (12 hours), one would expect that more sales wouldoccur during the day as opposed during the middle of the night. Thissituation could result in undesirable, dramatic price fluctuations. Tocompensate for the difference between the periods, Equation 2 can factorin one or more additional variables in order to stabilize prices.Alternatively or additionally, the length of the time periods can varyin order to compensate for the differences between the periods. Inanother form, the price fluctuations between day and night are leftalone so that users are given an incentive to download content whensystem activity is lower.

With the above background, an example will now be used to describe howprices are dynamically adjusted according to one embodiment of thepresent invention. In an initial time period (t=1), an initial price foran item is set. For example, the initial price of a song could be set to90 ($0.90), depending on whatever the content supplier and/or theadministrator using second time period (t=2), the processor 110 of thedynamic pricing system 102 changes the price in order to get a sample ofthe change in client demand at a differing price levels. In the currentexample, the price of a particular song is raised by 10c, which is shownin equation 3 below.

P ₂ =p ₁+0.10p ₁(or p ₂ =p ₁·×1.0)  (Equation 3)

where

p₂=price in the second time period.

Flow diagram 2500 in FIG. 25 illustrates this technique according to oneembodiment of the present invention. The technique described below willbe for a song, but as should be understood this technique can be appliedto the other types of media content items on the dynamic pricing system102. In stage 2502, the initial price (p₁) of a song for sale is set bythe dynamic pricing system 102 and displayed to the customer device 124.One or more orders for the song are received by the dynamic pricingsystem 102 in stage 2504, and the dynamic pricing system 102 stores inmemory 112 the price (p₁) and quantity ordered (q₁) for the first timeperiod. The length of the time periods in this embodiment can forexample be by second, by minute, hourly, daily, weekly, monthly, yearly,or some other time increment (i.e., every 33.5 seconds). In one form,the time interval for each period is one day. For instance, the firsttime period would be day 1, the second time period would be day 2 andthe third time period would be day 3. After the first time period, theprocessor 110 of the dynamic pricing system 102 in stage 2506 sets asecond price (p₂) for the song and supplies the second price (p₂) forthe song to the customer devices 124 (see, Equation 3). The processor110 in stage 2506 can either increase or decrease the price of the song.For explanation purposes, we will assume that the dynamic pricing system102 increased the price in stage 2506. In stage 2508, the dynamicpricing system 102 receives a quantity of orders (q₂) for the song fromthe customer devices 124. In time period three (t=3), the price andquantity ordered information from the previous two periods is used todetermine whether the price change from the first period to the secondperiod increased profits or not. If profits increased(q₂(p₂−c)>q₁(p₁−c)) then increasing prices further may be profitable. Ifprofit decreases, however, then a price decrease from initial price (p₁)may be appropriate. The changes in prices depend on the functional formof the particular demand curve for the particular content for sale.Using a logarithmic demand curve, Equation 4, which is shown below, canbe used to calculate profit.

profit=q(p−c)−Exp(α−βp) (p−c)  (Equation 4)

From Equation 4, the profit maximizing price can be determined to be asshown below in Equation 5.

$\begin{matrix}{p = \frac{\left( {1 + c} \right)}{\beta}} & \left( {{Equation}\mspace{14mu} 5} \right)\end{matrix}$

A nice property of Equation 5 is that price is not dependent uponunknown parameter α. However, the optimal price still depends on unknownparameter β. As should be appreciated, a number of techniques can beused to estimate the parameters β. In one technique, the twoobservations of price (p) and quantity (q) are combined from periods oneand two to generate an estimate of β. Equations 6 and 7 illustrate thistechnique.

Log [q ₁ ]=α−βp ₁+ε₁  (Equation 6)

Log [q ₂ ]=α−βp ₂+ε₂  (Equation 7)

Where ε₁ and ε₂=sampling error.

Equations 6 and 7 can be combined in order to determine parameter β,which is shown below in Equation 8.

β{Log [q ₂]−Log [q ₁]−ε₂−ε₁}/(p ₁ −p ₂)  (Equation 8)

It is assumed that the longer interval time between price changes, thesmaller expected sampling error (ε₂, ε₁) would be relative to thequantities ordered. Over a long period of time, the expected samplingerror terms would be zero. This yields equation 9 below.

$\begin{matrix}{\beta = \frac{\left\{ {{{Log}\left\lbrack q_{2} \right\rbrack} - {{Log}\left\lbrack q_{1} \right\rbrack}} \right\}}{\left( {p_{1} - p_{2}} \right)}} & \left( {{Equation}\mspace{14mu} 9} \right)\end{matrix}$

The profit maximizing, or optimal price, can be determined by combiningEquation 5 with Equation 9, which yields Equation 10 below.

$\begin{matrix}{p_{{t - 1},{opt}} = \frac{\left( {1 + c} \right)\left( {p_{t - 2} - p_{t - 1}} \right)}{\left\{ {{{Log}\left\lbrack q_{t - 1} \right\rbrack} - {{Log}\left\lbrack q_{t - 2} \right\rbrack}} \right\}}} & \left( {{Equation}\mspace{14mu} 10} \right)\end{matrix}$

In order to prevent extreme fluctuations in pricing between two periods,the change in pricing between two different periods is dampened so thatwild fluctuations in pricing does not occur. The amount of dampening canbe adjusted depending on the amount of aggressiveness in pricing thecontent supplier and/or administrator intends to use. The estimation ofβ is highly subject to sampling error. Therefore, to be conservative, ageometric mean between the previous price and the new estimated optimalprice is taken. In addition, absolute bounds on how much a priceadjustment between two periods is further set to further dampen pricing.This is done just in case the estimation procedure gives an inaccurateestimate. A generic form of this technique used by the dynamic pricingsystem 102 is shown in Equation Set 11 below.

Set

p _(t) =p _(t−1) −L if p _(t−1), opt<p_(t−1) −L

p _(t)=(p _(t−1))^(w)(p _(t−1,opt))^((1−w)) if p _(t−1) −L≦p _(t−1,opt)≦p _(t−1) +L

p _(t) =p _(t−1) +L if p _(t−1,opt) >p _(t−α) +L  Equation Set 11)

Where

L=limit bounds, and

W=weighting factor.

Limit bounds (L) in Equation Set 11 is used to limit how much the pricewill be adjusted between two periods. For example, if the optimal pricefor the previous time period is greater than the limit bounds (L) fromthe actual price, then the dynamic pricing system 102 sets the price forthe current time period (p_(t)) to the limit bound (L) from the previoustime period price (p_(t−1)). Weighting factor (W) is used as a geometricmean of weighting the different prices between the optimal and theactual pricing. For example, the weighting factor is used when theoptimal price for the previous time period (p_(t−1,opt)) is within thelimit bounds (L). The geometric mean of the weighting factor (W) allowsthe price to move in the direction of the estimated optimal price(p_(t−1,opt)), but forces the price to move slowly. Aggressiveness inprice adjustments can be adjusted by adjusting the weighting factor W.The more comfortable the administrator and/or content supplier are withthe pricing estimates, the more aggressive the pricing can become byadjusting weighting factor W.

For example, at time period one, the dynamic pricing system 102 pricedthe song at $1.00 (p₁=$1.00) and the number of copies of the song thatwere purchased during time period one was 150 (q₁=150). During timeperiod two, the dynamic pricing system 102 priced the same song at $1.40(p₂=$1.40) and the number of copies of the song that were purchasedduring time period two was 100 (q₂=100). In time period three, thedynamic pricing system 102 determines the optimal price to be thefollowing in Equation 12 (stage 2510). In Equation 12, we have assumedthe marginal cost of supplying an additional copy to be negligible, orzero (c=0) for this example.

$\begin{matrix}{{p_{2,{opt}} = \frac{\left( {1 + c} \right)\left( {p_{1} - p_{2}} \right)}{\left\{ {{{Log}\left\lbrack q_{2} \right\rbrack} - {{Log}\left\lbrack q_{1} \right\rbrack}} \right\}}}{p_{2,{opt}} = {\frac{\left( {1 + 0} \right)\left( {1.00 - 1.40} \right)}{\left\{ {{{Log}\lbrack 100\rbrack} - {{Log}\lbrack 150\rbrack}} \right\}} = 0.99}}} & \left( {{Equation}\mspace{14mu} 12} \right)\end{matrix}$

With the bounds equals $0.50 (L) and weighting factor W=0.8 in thisexample, the dynamic pricing system 102 uses Equation Set 13 below inorder to determine the dynamic price at time period three (p₃).

Set

p ₃ =p ₂−0.50 if p _(2,opt)<2+0.50

p ₃=(p ₂)^(0.8)(p _(2,opt))^(0.2) if p _(2-0.50) ≦p _(2,opt) ≦p ₂+0.50

p ₃ =p ₂+0.50 if p _(2,opt) >p ₂+0.50

p ₃=(1.40)^((0.8))(0.99)^((0.2))=$1.31  (Equation Set 13)

In stage 2510, the dynamic pricing system 102 with processor 110 setsthe revised sale price for the item and stores the price in memory 110.Using the above example, the dynamic pricing system 102 would then setthe price of the song to $1.31 in time period three. For subsequent timeperiods, as more orders are received in stage 2508, the dynamic pricingsystem 102 continues to periodically re-price the content according tothe Equation Set 11.

Equation 14 below is a generic form for another technique of dynamicallypricing an item according another embodiment of the present invention.

New Dynamic price=Price Basis×Dynamic Price Modifier  (Equation 14)

In Equation 14, the price basis is modified by the dynamic pricemodifier so as to result in a new dynamic price for an item. In oneform, the dynamic price modifier is some measure of change in demand forone or more items being priced. In another form, the dynamic pricemodifier can take into account profitability of different price levels.It should be understood that the dynamic pricing modifier can take intoaccount other factors. These factors can include, but are not limitedto: the marginal and/or fixed costs of the item; price ceilings and/orfloors for the item; file size of the item; the bandwidth of theconnection to the dynamic pricing system 102; the quality of the item;the popularity of the item as measured by third parties, such as theBillboard ranking of a song; reviews of an item; and number of times anitem has been viewed on the dynamic pricing system 102. Generally, thedynamic price modifier increases the price of an item when demand forthat item increases and reduces the price of an item when the demand forthe item decreases. In one form, the dynamic pricing modifier is basedon the differences between the quantity ordered at specific intervals.For instance, these intervals can be by second, by minute, hourly,daily, monthly, or yearly. In another form, the dynamic pricing modifieris based on the time between successive purchases. For example, if thetime delay between successive purchases decreases, the dynamic pricingsystem 102 can infer that demand is increasing and thus increase theprice for the item.

FIG. 26 is a flow diagram 2600 that illustrates a technique fordynamically pricing content items according to another embodiment of thepresent invention. In the technique illustrated in FIG. 26, the price ofan item is changed based on the time delay between orders for the item.An initial price for the item for sale on the dynamic pricing system 102is set in stage 2602. The content supplier and/or the systemadministrator can set the initial price initial price for the item.Alternatively or additionally, the dynamic pricing system 102 in thisand other embodiments can automatically set the initial price based ondefault prices and/or historical prices for similar content stored inmemory 112. In one form, the administrator through administrativecomputer 104 sets the initial price for content on the dynamic pricingsystem 102. In another form, the content supplier sets the initial pricein stage 2602. In stage 2604, the processor 110 of the dynamic pricingsystem 102 receives a customer order over the network 106. From theclock 111, the processor 110 in stage 2606 stores in memory 112 the timethe order was received, and the dynamic pricing system 102 processes theorder. It should be appreciated that the time recorded from the clock111 can be based on other events related to the order, such as when thecontent was actually delivered. In stage 2608, the processor 110determines the time period (t) between the current purchase and theprevious purchase of the item. In another form, the clock 111 is resetafter each purchase such that the processor 110 stores in memory 112 thetime period (t) between the current and previous purchases. Initially,at the first purchase of the item, the time period (t) between purchasescan be based on the time delay between when the item was originallyavailable on the dynamic pricing system 102 and when the first purchasewas made. The time when the item was first available on the dynamicpricing system 102 can be stored into memory in stage 2602. In anotherform, the processor 110 waits to receive a second order from a customerbefore calculating the time delay (t) between purchases. It should beappreciated that the dynamic pricing system 102 can record a series ofpurchase times before dynamically pricing an item.

In stage 2610, the processor 110 determines the average time delay((AVE(t)) between purchases. In one form, the average time delay iscalculated for all purchases, and in another form, the average timedelay is calculated for a set number (N) of previous purchases so as totake into account shifts in the demand curve. In one particular form,the average time delay is calculated for the last 10 periods (N=10).Equation 15 below illustrates how the average time delay is calculated.

$\begin{matrix}{{{AVE}(t)} = \frac{t_{i} + t_{i - 1} + \ldots + t_{i - N + 1}}{N}} & \left( {{Equation}\mspace{14mu} 15} \right)\end{matrix}$

Where AVE(t)=Average Time Delay Between Purchases, t_(i)=Time delayPurchase Period i and N=Number of Periods

Generally, when the current time delay is less than the average timedelay, it can be inferred that demand for the item has increased.Conversely, if the current time delay is greater, then it can beinferred that demand has lowered. In stage 2612, the processor 110 ofthe dynamic pricing system determines whether or not the current timedelay between purchases (t) is less than average time delay betweenpurchases (AVE(t)). If the current time delay is less than the average,the processor 110 increases the price of the item in stage 2614. In oneform of the present invention, the price would be adjusted according toEquation 16 as illustrated below. As can be seen below, Equation 16 isderived from Equation 14.

$\begin{matrix}{P_{i + 1} = {P_{i} \times \frac{{AVE}(t)}{t_{i}}}} & \left( {{Equation}\mspace{14mu} 16} \right)\end{matrix}$

Where P_(i+1)=New Dynamic Price and P_(i)=Price Basis, or Current Pricefor Period i. In Equation 16, the price basis is the price of the itemfor the latest period, and the dynamic price is the new price for theitem. For example, if the price of the item was currently $1.20, theaverage time between purchases was 20 seconds and the current delaybetween purchases was 15 seconds, the new price for the item would be$1.60 (1.20.times.20/15=1.60). In another form of the presentembodiment, the processor 110 takes into account of the upper price, orprice ceiling, for the item. As previously mentioned, the contentsupplier, such as the artist, and/or the system administrator canspecify upper and lower price limits for a particular item, such as asong. If, for example, the calculated new dynamic price exceeded theupper price limit, the processor 110 in stage 2614 would set the newprice to the upper limit price. It should be appreciated that otherfactors, such as the ones mentioned above, can be factored in whenadjusting the price in stage 2614. Potential customers can review thenew, dynamic price 2404 in screen 2400 (FIG. 24A) and can decide whetherto purchase the item at the new price 2404. When a customer decides topurchase the item at the increased price (after stage 2614), theprocessor 110 then proceeds to stage 2604 so as to process the nextcustomer order.

If the current time delay (t) between purchases is not less than theaverage time delay between purchases in stage 2612, then the processor110 in stage 2616 determines whether the current time delay (t) betweenpurchases is greater than the average time delay between purchases. Ifso, then it can be inferred that demand for the item has lowered, andthe processor 110 in stage 2618 decreases the price of the item. In oneform, the processor 110 reduces the price using Equation 16 (above). Forexample, if the price of the item was currently $1.20, the average timebetween purchases was 15 seconds and the current delay between purchaseswas 20 seconds, the new price for the item would be $0.90(1.20.times.15/20=0.90). As should be appreciated, the processor 110 canconsider other factors, such as the quality of the item, marginal costand available bandwidth, when adjusting the price in stage 2618. Forinstance, in one form, the processor 110 also determines in stage 2618whether the new price is less than the predefined lower price limit, orfloor, for the item. If the new price is less than the lower pricelimit, then processor 110 only sets the new price at the lower limit. Inanother embodiment, to prevent wild fluctuations in price, the dynamicpricing system 102 in stages 2614 and 2618 can dampen the price changesbetween periods. When in stage 2616 the current time delay (t) betweenpurchases is not greater than the average time delay between purchases,the processor in stage 2620 makes no price adjustment. In anotherembodiment, to prevent the price from being locked into a local maximumprice, the processor 110 in stage 2620 randomly adjusts the price. Afterstages 2614, 2618 or 2620, customers can review the new price and placeorders in stage 2604.

A technique for dynamically pricing items according to anotherembodiment of the present invention will now be described with referenceto flow chart 2700 in FIG. 27. In this technique, the databases 225record the number purchases of each item in the dynamic pricing system102. In one form of this embodiment, a dynamic pricing system 102periodically updates the prices of each item for sale. The periodicupdate can be for every second, every minute, hourly, monthly, and/oryearly, to name a few time periods. In one form, the price of individualitems is updated nightly. In another form, the prices are updated everyminute. Each item for sale and/or type of item for sale, such a countrysongs, can be dynamically priced at different intervals and/or usedifferent pricing techniques depending the nature of the item sold. Forexample, higher ticket items, which sell at a slower rate, may havetheir prices less frequently updated as compared to lower ticket items,which sell at higher volumes. Further, groups of items can beaggregately priced together.

As mentioned above, a number of different people can set the initialprice of an item. For instance, the artist, content supplier, owner ofthe item, and/or the system administrator can set the initial price foran item. In stage 2702, the dynamic pricing system 102 stores in memory112 the initial price as the current best price for the item. Theprocessor 110 in stage 2704 stores in memory 112 the number of sales ofthe item at the initial price for a specified time interval and theprofit generated (best profit). In one form, the pricing and quantityinformation is updated daily in the tables 302 of the database 225.After the specified time interval, the processor 110 randomly changesthe price within a range around the best price in stage 2706. In oneform, the dynamic pricing system 102 randomly adjusts the current pricewithin −5% to +5% of the best price. As should be understood, the pricecan be randomly adjusted within different ranges. In another form, theprice is randomly adjusted without having specified upper and/or lowerrange limits. In stage 2708, the processor 110 records in memory 112 thequantity order (Q_(a)) at the adjusted current price for the same timeinterval as in stage 2704 (for example, daily or every minute). Theprocessor 110 in stage 2710 checks to see if the quantity ordered in thelast time interval was greater than zero (0). If not, the processor 110in stage 2712 reduces the current price. For example, the processor 110can reduce the price by $0.10 increments when there are no sales of theitem within the specified period. In another form, the price is loweredby a percentage of the current price, such as 10% of the current price.If the price reduction in stage 2712 would reduce the current pricebelow the lower price limit, when specified, the process 110 sets thecurrent price to the lower limit. As mentioned above, the lower limitmay be based in part on the marginal and/or fixed costs for the item.After the price is reduced in stage 2712, the processor 110 in stage2708 records the quantity sold at the new reduced price for thespecified time interval. In an alternate form, the processor 110 instage 2712 increases the time interval in which the quantity ordered isrecorded in stage 2708. As should be appreciated, the processor 110 canboth reduce the price and increase the time interval in stage 2712.

When in stage 2710 the quantity ordered at the adjusted price is greaterthan zero (0), the processor 110 determines whether the profit at thecurrent price is at least equal to the best profit stored in memory 112.In one form, the processor 110 determines profit by using Equation 2,above. As should be appreciated, the dynamic pricing system 102 can takeinto account other factors when determining the profit. For example,these factors can include fixed costs, bandwidth used, and file size, toname a few. If in stage 2714 the current profit is equal to or betterthan the best profit at the best price, which is stored in memory 112,then the processor 110 in stage 2716 sets the current price as the bestprice in memory 112. In one form, the processor 110 also stores inmemory 112 the quantity ordered at the now, best price such that profitcan be calculated. In another form, the processor 110 stores in thememory 112 the current profit as the best profit. Following stage 2716,the processor 110 randomly increases the price for the item within aspecified range above the current price. This range limit can bepredefined and/or determined through historical data. In one form, therandom price is generated within a range from 0% to 10% above thecurrent price. It should be appreciated that the processor 110 can use anumber of techniques for generating the random numbers (pseudo-random)as would occur to those of ordinary skill in the art. When an upperlimit in price is defined, the price of the item will only be increasedto the upper limit price. After the price is increased in stage 2708,the processor 110 proceeds to stage 2718 and records the quantityordered (Q_(a)) at the new adjusted price. By changing the best price instage 2716 even when the current profit is equal to the best profit instage 2714, removes old best prices that may be based on a differentdemand curve.

In another alternative, the processor 110 in stage 2714 determineswhether the profit at the current price is better than the profit at therecorded best price. If so, the processor 110 proceeds to stage 2716. Ifthe current profit is equal to the best profit, then the best priceremains the same, the current price is not adjusted, and the processor110 proceeds to stage 2708.

When in stage 2714 the current profit is less than the best profit, theprocessor 110 in stage 2720 determines whether there is a small pricedifference between the current price and the best price. The smalldifference can be based on a percentage basis between the prices and/orby a fixed amount. In one form, the small price difference is less thanor equal to a one-percent (1%) change the price. In another form, thesmall price difference is two-cents ($0.02). It should be understoodthat other values can be used for the price differential. If there is asmall price difference between the current price and the best price, theprocessor 110 proceeds to stage 2706 and randomly adjusts the priceswithin a range around the best price. Stage 2720 reduces the likelihoodthat the best price will be stuck at a local maximum in profit. Whenthis problem is not a concern, stage 2720 can be omitted. If there isnot a small difference in price between the best and current prices instage 2720, the processor 110 in stage 2722 reduces the current price tohalfway between the current price and the best price. For instance, ifthe current price is $1.00 and the best price is $0.90, the new adjustedprice would be $0.95. As should be appreciated, the price in stage 2722could be reduced by some other fraction of the price differentialbetween the current price and the best price, besides one-half. In oneform, if the reduced price is lower than the lower price limit for theitem, then the new adjusted price in stage 2722 is set to the lowerprice limit for the item. After reducing the price in stage 2722, thedynamic pricing system 102 proceeds to stage 2708 and tracks thequantity ordered at the new adjusted price. As shown in FIG. 27, thedynamic pricing system 102 using the technique illustrated in flowchart2700 continues to periodically adjust the price of items.

In another technique, the period of time between recording the quantityorder is variable. This technique can be used in the applicable,above-described techniques for dynamically pricing items, but instead“quantity” in this technique is replaced with “quantity/length of timeperiod”. For example, in stage 2708 of flow chart 2700, the “quantityordered/length of time period” is recorded when the time period isvariable. The dynamic pricing system 102 for instance would recordone-hundred songs per hour (100 songs/hour) when one-hundred and fifty(150) songs are ordered in a one and a half hour (1.5) time period. Byrecording the “quantity/length of time period” improves sampling duringslow order periods, such as at night.

As should be appreciated, different items for sale on the dynamicpricing system 102 may use different techniques for dynamically pricingthe items. For example, popular music may be dynamically pricedaccording to the technique illustrated in FIG. 26; while text may bedynamically priced according to the technique illustrated in FIG. 27. Inanother example, “popular” songs are dynamically priced using a variabletime period; while “classical” songs are dynamically priced using afixed time period.

In one embodiment of the dynamic pricing system 102, servlets performthe above-described functions in order to operate the dynamic pricingsystem 102. In one form, Java servlets are used. As should beappreciated the dynamic pricing system 102 can use other types ofsystems in order to operate. A block diagram 2800 showing therelationship of servlets 2801 loaded on each of the navigation servers204 is illustrated in FIG. 28. In diagram 2800, dashed arrows 2802represent links between pages and solid arrows 2803 represent data flow.Main page servlet 2804 generates the anonymous main page 500 when theuser is not logged into the dynamic pricing system 102 and theregistered user main page 1000 when the user has logged onto the dynamicpricing system 102. Registration servlet 2805 handles user registrationwith the dynamic pricing system 102. As depicted, the registrationservlet 2805 creates the registration form(s) 600. Once the user submitsform 600, the registration servlet 2805 adds the new user to the userdatabase 236 and logs in the new user automatically. Login servlet 2806is responsible for logging in registered users into the dynamic pricingsystem 102. As shown, the login servlet 2806 includes an add sessionservlet 2808 which adds a new sessions to the session table 314 in theuser database 236. For example, after the registration servlet 2805registers a new user, the registration servlet 2805 automatically logsin the new user by calling the add new session servlet 2808. The loginservlet 2806 generates the login form 900, and once the user submits afilled-out login form 900 to the navigation server 204, the loginservlet 2806 checks to see if the username and password are valid bycomparing the entered username and password with the user database 236.If the username and password are valid, the add new session servlet 2808adds a new session to the session table 314 in the user database 236.After the user is logged into the dynamic pricing system 102, the loginservlet 2806 returns control back to the servlet 2801 that originallycalled the login servlet 2806. Any page that requires the user to have asession will query the session table 314 in the user database 236 beforethe user is allowed to proceed. If the user does not have a currentsession, the login servlet 2806 is called so that the user can login tothe dynamic pricing system 102.

In FIG. 28, account information servlet 2810 is responsible formaintaining the user account tables 312 in the user database 236. Theaccount information servlet 2810 generates the forms, such as forms 1200and 1500, that are used to update the account tables 312 in the userdatabase 236. Navigation heartbeat servlet 2811 monitors the operationalload of the servlets 2801 on the navigation server 204 and transmits theload information to the heartbeat server 206. Moreover, the navigationheartbeat servlet 2811 retrieves load information about the othercomponents of the dynamic pricing system 102 from the heartbeat server206 and communicates the load information of the other components to theindividual servlets on the navigation server 204.

Search servlet 2812 processes search requests from the users. Asillustrated, the search servlet processes the search forms, such assimple search form 512, media form 1800 and advanced search form 1600.For example, the search servlet 2812 can transmit the advanced searchform 1600 to the client 108. After the user through client 108 submits afilled-out advance search form 1600 to the navigation server 204, thesearch servlet queries one or more of the databases 225, and thedatabases 225 return results from the query to the search servlet 2812,which in turn sends search results page 1700 to the client 108. Analternate view of the same process is illustrated in FIG. 2. In thisexample, the client 108 submits a search request form, as shown by arrow250, to the connection server 202. The connection server 202 based onthe load information from the navigation heartbeat servlet 2811, whichwas supplied by the heartbeat server 206, directs the submitted form, asshown by request arrow 252, to one of the navigation servers 204. Asshown by query arrow 256, the search servlet 2812 on the navigationserver 204 queries one or more of the databases 225. The results fromthe query, as shown by results arrow 258, are returned to the searchservlet 2812. Based on the results, the search servlet 2812 generatesthe search results pages 1700 or 2300, for example, and as indicated byarrow 260, the navigation server 204 transmits the search results page1700 to the client 108.

Although not loaded on the navigation server 204, file servlet 2814 isshown in FIG. 28 in order to show how the file servlet 2814 relates tothe other servlets 2801 on the navigation server 204 in FIG. 28. Asshown in FIGS. 28 and 29, the file servlet 2814 runs on the file servers210 and is responsible for generating the download form 2400. The fileservlet 2814 further verifies if the user has a valid, current sessionidentification. If not, then the user is requested by the login servlet2806 to login to the dynamic pricing system 102. After logging into thesystem, control is returned to the file servlet 2814. The download form2400 is generated based on the media ID 318 and the home server location328 that is stored in the media information tables 304. For example, thefile servlet 2814 sends the download form 2400 to the customer device124, and when the customer selects buy link 1732 in page 1700 or buylink 2320 in page 2300, the file servlet 2814 gets the pricinginformation from the pricing tables 306 in the databases 225 and debitsthe user account 390 in the user database 236. The file servlet 2814further updates the quantity demand in the pricing 306 and mediainformation 304 tables. As shown by arrow 264 in FIG. 2, the fileservlet 2814 transfers a file containing the purchased content to theclient 108.

As depicted in FIG. 29, each file server 210 incorporates a number ofservlets 2801 that are used to control the operation of the file server210. The servlets 2801 on the file server 210 include the file servlet2814, a file heart beat servlet 2902, a resume download servlet 2904 anda populate servlet 2906. The file heartbeat servlet 2902 collects theload information from the servlets 2801 on the file server 210 and sendsbeat information to the heartbeat server 206. The file heartbeat servlet2902 further retrieves the load information for the other file servers210 and the database servers 208 from the heartbeat server 206. Theheartbeat servlet 2902 communicates the load information to the otherservlets 2801 on the file server 210. As mentioned above, the fileservlet 2814 downloads purchased items to the clients 108. If whiledownloading an item, the user becomes disconnected from the network 106or the download is interrupted in some other manner, the resume servlet2904 allows the customer to download the content again for a specifiedperiod without being charged. For example, if a customer device 124 isdisconnected from the dynamic pricing system 102 while downloading asong, the customer can download the song again within two days withouthaving the price of the song deducted from their account for a secondtime.

In order to service high demand for a particular item, the populateservlet 2906 on each of the file servers 210 collects the number ofcurrent downloads of an item and determines which files need to becopied across multiple file servers 210. For example, when a songbecomes popular, the populate servlet 2906 places copies of the song onmultiple file servers 210, as indicated by arrow 2908. The home fileserver 210 for the particular song maintains a table that identifies thefile servers 210 that have copies of the song. If the home file server210 for the song is busy when a request to download the song isreceived, the home file server 210 forwards the request to one of thefile servers 210 that has a copy of the song file, which processes thedownload request. Since the file servlet 2814 of the home file server210 is always contacted first, the home file server 210 is always ableto track the demand of the item and increment the demand in the pricing306 and media information 304 tables.

As shown in FIGS. 30A 30E each database server 208 includes a number ofservlets 2801 that perform specific tasks on the database server 208.Perform query servlet 3002 can be called by any other part the dynamicpricing system 102, as shown by arrow 3004. As shown by arrow 3006,servlet 3002 can query, insert and/or delete records from the tables 302of the databases 225. The results of the query, as indicated with arrow3008, can be returned to servlet 3002.

As indicated by arrow 3010 in FIG. 30B, search servlets 2812 on thenavigation servers 204 call execute search servlet 3012 on the databaseservers 208 in order to search for particular keywords in the mediainformation tables 304. To improve response time for queries, thedatabase servers 210 each maintain a keyword cache 3014 along with amedia and pricing information cache 3016. The keyword cache 3014 isstructured like the keyword table 308 and maintains a temporary list ofpopular keyword searches. The media and pricing information cache 3016temporarily stores information about individual media items along withtheir current price. Like the keyword tables 308 and the mediainformation tables 304, keyword cache 3014 and media cache 3016 arelinked to one another via the media ID 318. When the execute searchservlet 3012 receives a simple, or default search request, the executesearch servlet 3012, as shown by arrow 3018, first queries the keywordcache 3014. For instance, a simple search can occur when the user isbrowsing by media type, such as the searches submitted through field512. When the keyword cache 3014 contains the search keyword, the mediacache 3016 returns the search results to servlet 3012, which is depictedwith arrow 3020. As shown by arrow 3022, when the keyword cache 3014does not include an entry for the keyword, the keyword table 308 is thenqueried. The keyword table 308 is directly queried by servlet 3012, whenthe user submits an explicit search, such as with form 1600 (arrow3024). As mentioned above, the keyword 308 and pricing 306 tables arerelated to the media information table 304 via the media ID field 318.As shown by arrow 3026, the search results from tables 304 and 306 arereturned to the execute search servlet 3012, which in turn returns theresults to the search servlet 2812 (FIG. 28). As previously discussed,the search results can include the dynamic price for an item, such as asong. The dynamic price for the item is either retrieved from cache 3016or from the pricing table 306.

As illustrated in FIG. 30, get media file information servlet 3028 isused to retrieve media and pricing information that is used by the fileservers 210. As shown by arrow 3030, the file servers 210 can callservlet 3208. The media information servlet 3028 first sends allrequests (arrow 3032) to the media cache 3016. If cache 3016 is able toprocess the request, the search results (arrow 3034) are returned toservlet 3028. When cache 3016 is unable to process the request, thesearch request is then processed by the media 304 and pricing 306 tables(arrow 3036). In response to the request, tables 304 and 306 insert anew entry corresponding to the search results into the media cache(arrow 3038) and return the search results to the media informationservlet 3028 (arrow 3040). Afterwards, the search results from servlet3028 are then returned to the calling file server 210.

As depicted with arrow 3042 in FIG. 30D, the file servers 210 callincrement demand servlet 3044 to increase the quantity demand for anitem in the media cache 3016. Servlet 3044 can either insert a newdemand entry or update a demand entry for an item in cache 3016 (arrow3046). For instance, when an item is purchased and downloaded the fileserver 210 will call the increment demand servlet 3044 in order recordan order of the item. If a record for the item is not in cache 3016,increment demand servlet 3044 will create a new record in cache for theitem. The record in cache 3016 can contain the media ID 318 and demand348 (or 350) fields. When a record for the item already exists in cache,servlet 3044 increases the number contained in the demand field 350.Periodically, cache 3016 is cleaned and the demand information containedtherein is transferred to the media 304 and pricing 306 tables beforecleaning.

In each of the database servers 208, dynamic pricing servlet 3048 isused to dynamically price items in system 102. Servlet 3048 includes aninitialization thread 3050, one or more pricing threads 3052, and one ormore cleaning threads 3054. On startup of the database server 208, theinitialization servlet 3050 retrieves the names of all of the pricingalgorithms in field 336 for each item (arrow 3056) and starts a pricingthread 3052 for each pricing technique. As previously discussed, thedynamic pricing system 102 can use different techniques to priceindividual items and/or groups of items. For instance, country songs canbe dynamically priced by a first pricing thread 3052 that uses thetechnique illustrated in FIG. 26; while jazz songs and mystery books canbe dynamically priced by a second pricing thread 3052 that uses thetechnique illustrated in FIG. 27. In one form, as shown by arrow 3058,the pricing thread 3502 periodically updates at specified intervals theprices of items in fields 346 and 356 of the media table 304 and pricingtable 306, respectively. After updating the pricing information intables 304 and 306, the pricing thread 3502 then updates the pricinginformation in media cache 3016, as shown by arrow 3060. In oneembodiment, the pricing thread 3052 updates the pricing information intables 304 and 306 for all items that use the pricing thread 3052, andthen updates the prices in cache 3016 for the items. In anotherembodiment, the pricing thread 3052 updates the pricing information inthe media 304 and pricing 306 tables along with media cache 3016individually for each item. The pricing threads 3052 can dynamicallyprice items at different intervals, such as by minute, hourly, or daily.In one form, the pricing threads 3052 dynamically price items daily.When pricing thread 3052 uses the technique of dynamically pricing itemsbased on time between purchases (FIG. 26), the pricing thread 3052 doesnot necessarily have to update the price at a fixed interval. Forexample, the pricing thread can update the price of the item after theitem is purchased or when a page containing the price for the item isgenerated.

In FIG. 30E, the cleaning thread 3054 periodically removes items withlow demand from the media cache 3016, as shown by arrow 3062, andcommits these items removed from cache 3016 to the media 304 and pricing306 tables, as indicated by arrow 3064. For instance, when the demandfor an item in the last dynamic pricing period was zero (0), thecleaning thread 3054 removes the information about the item, such as themedia ID, price and demand, from the media cache 3016 and commits thisinformation to tables 304 and 306. It should be understood that thedynamic pricing system 102 can include a single cleaning thread 3054,multiple cleaning threads 3054 or no cleaning threads 3054 at all. Forexample, no cleaning threads 3054 are needed, when cache is not used. Inone form, the cleaning thread 3054 operates periodically in conjunctionwith a corresponding pricing thread 3052. For example, each pricingthread 3052 can have a corresponding cleaning thread 3054 that runseither before or after the pricing thread 3052 dynamically prices items.In another form, the cleaning thread 3054 periodically operates at adifferent time interval as compared to the corresponding pricing thread3052.

A technique for receiving content and paying content suppliers will nowbe described below with reference to flow chart 3100 in FIG. 31. Instage 3102, a content supplier registers to supply content for sale onthe dynamic pricing system 102. As mentioned above, the contentsuppliers can be for example artists, authors, agents, publishers,content owners, programmers, record labels, publishers, licensingorganizations, producers, and the like. Referring to FIG. 10, thecontent supplier initiates the registration process by selecting artistbutton 522. After button 522 is selected, the dynamic pricing system 102sends to the content supplier computer 116 an artist agreement andrelease form 3200. As illustrated in FIG. 32, form 3200 includes anagreement portion 3202 in which the terms of the artist agreement andrelease are listed. The name and address of the content supplier can beentered into fields 3204 and 3206, respectively. As should beappreciated, form 3200 can contain other fields in which additionalinformation can be entered. The content supplier agrees with the termsof the agreement by selecting agree button 3208 and cancels theagreement by selecting cancel button 3210. In a further embodiment, thecontent supplier accepts the contract by applying their digitalsignature to the agreement form 3200 and sending an email with theagreement form 3200 to the dynamic pricing system 102. After form 3200is submitted, the dynamic pricing system 102 can store a copy of theagreement in the database 225 for future reference.

In response to the submission of form 3200, the dynamic pricing system102 sends to the content supplier computer 116 a content pricing anddownload form 3300. In later sessions, once the content supplier hasaccepted the agreement in form 3200, the dynamic pricing system 102 willsend the pricing form 3300 when artist button 522 is selected. With form3300, the content supplier is able automatically submit content for saleon the dynamic pricing system 102. As depicted in FIG. 33, form 3300includes a title field 3302, a length field 3304, a file location field3306, an initial price field 3308, a minimum price field 3310 and amaximum price field 3312. The content supplier can enter the title ofthe work in field 3302 and the length of the work in field 3304. Thefilename and path on the content supplier computer 116 for the file thatcontains the work for sale is entered into field 3306. In anotherembodiment, the content supplier can enter the path and/or IP address ofanother client 108 that contains the work in field 3306. The contentsupplier enters the initial offering price of the work into field 3308.Alternatively, the content supplier can leave field 3308 blank such thatthe administrator sets the initial price or a default initial pricevalue is used. The content supplier can enter the minimum and maximumprice of the work in fields 3310 and 3312, respectively. Alternatively,the content supplier can leave fields 3310 and 3312 blank so that nopricing limits are used when system 102 dynamically prices the work. Inanother embodiment, the content supplier with form 3300 can determinethe rules, pricing techniques and time frames for the sale of the items.For example, when the content supplier provides a subscription service,such as for web site access to a music subscription service, the contentsupplier limit the access time to one week and/or specify the number ofsearches on the site. As should appreciated, form 3300 can omit fieldsand/or contain additional fields, such a type of work field, an artistidentification field, a cost field and a field specifying the dynamicpricing technique to use. In another embodiment, a spreadsheet interfaceis used to enter information for larger number of works, and in afurther embodiment, database files for the items for sale from thecontent supplier are imported into the dynamic pricing system 102.

To submit the work, the content supplier selects submit button 3314, andin response, the content provider computer 116 transfers over thenetwork 106 the file specified in the file location field 3306 alongwith the other information from form 3300 to the dynamic pricing system102. As should be appreciated, with the P2P embodiment of the dynamicpricing system 102, the client 108 only needs to transfer theinformation from form 3300 to system 102 and does not need to transferthe file. However, in another form of the P2P embodiment, the file istransferred. In stage 3104, the dynamic pricing system 102 receives thefile containing the downloaded content and the other information fromform 3300. The dynamic pricing system 102 stores the downloaded file inat least one of the file servers 210 and submits the information aboutthe work to the database servers 208. In another embodiment, the dynamicpricing system 102 adds the work to the master database server 212 andthe master file server 214, which in turn updates the database 208 andfile 210 servers so as to incorporate the new work. In the pricing form3300, the content provider can cancel a submission by selecting cancelbutton 3316.

In another embodiment, stages 3102 and 3104 can be performed manually.For example, the artist can manually execute the required paperwork andmail the paperwork along with copies of the content, such as a CDcontaining the work, to the administrator of the dynamic pricing system102. Once the paperwork and content is received, the administrator withthe administrative computer 104 can add the work and pricing informationto master servers 212 and 214. During their periodic update of thedatabase 208 and file 210 servers, the master database server 212 andmaster file server 214 add the new work to servers 208 and 210.

In stage 3106, the dynamic pricing system 102 tracks the purchases ofthe work, and the dynamic pricing system 102 stores the price andquantity demand for the item in the database servers 208. In stage 3108,the content supplier of the work is compensated for the work. The ownerof the dynamic pricing system 102 generates revenue by receiving aportion of the revenue generated by the sale of items on the dynamicpricing system 102. In one embodiment, the content supplier is paid apercentage of the profit generated from the sales of the work on thedynamic pricing system 102. In another embodiment, the content supplieris paid a fixed fee for each time the work is purchased, and in afurther embodiment, the content supplier can be paid a flat fee for thework. The compensation can be sent to the content supplier in a numberof manners. For example, each time the work is sold, the account balance390 for the content provider can be credited. The content supplier canalso have the money credited to a deposit account each time the work ispurchased. Alternatively, the dynamic pricing system 102 canperiodically send a check to the content supplier for the amount thework earned during the last period. In another arrangement, the thirdparty payment system 136, such as PayPal.com, supplies the payment tothe content supplier. It should be understood that other types ofcompensation arrangements can be made.

As discussed above, institutions such as colleges and universities haveblocked file swapping services from their networks 115 because the largevolumes of downloads from such systems clog their networks 115. With thehigh loads created by the file swapping services, institutions bearsignificant costs and yet receive no benefit from the file swappingservices. A technique for providing institutions incentives to allowtheir members access the dynamic pricing system 102 will now bedescribed with reference to flowchart 3400 in FIG. 34. With thistechnique, since institutions benefit when their members to use thedynamic pricing system 102, the institutions will be more inclined tonot block access to the dynamic pricing system 102. In stage 3402, arepresentative of the institution, which operates network 115, registerswith the dynamic pricing system. During the registration stage 3402, therepresentative provides the name of the institution along with otherinformation about the institution to the dynamic pricing system 102. Therepresentative can register the institution directly with the dynamicpricing system 102 by filling out an online form. Alternatively, therepresentative can contact and supply the information to the systemadministrator, and the system administrator can then enter theinformation into the dynamic pricing system 102. In another embodiment,institutional registration is optional such that an institution does notneed to register in order to receive compensation. For example, theinstitutional network 115 can be automatically identified by the IPaddress of the user, and the compensation can be forwarded to theinstitution and/or the institution contacted about the compensationwithout requiring any registration by the institution. Therepresentative in stage 3402 further indicates how members of theinstitution can be identified. These institutional member identifierscan include, but are not limited to, the IP addresses of theinstitutional devices 125, the IP address of a firewall for theinstitutional network 115, a client identifier such as a “cookie”, andthe domain name for the institution. In one form, the domain name foremail accounts on the institutional network 115 is used to identifyinstitutional members like college students. Moreover, in stage 3402,the representative can specify how any revenue generated by theinstitution on the dynamic pricing system 102 is to be paid. Forexample, a university can designate a particular scholarship that willreceive the funds from the dynamic pricing system 102. After theinstitutional information is submitted, the dynamic pricing system 102stores the information (all or part) in the database servers 208. In oneform, the dynamic pricing system 102 creates a user account for theinstitution and records the institutional information in the useraccount. In another form, the institutional information is maintained inone or more separate database tables 302.

In stage 3404, the dynamic pricing system 102 receives a purchaserequest from a customer, and in stage 3406, the processor 110 of thedynamic pricing system 102 determines whether the customer is a memberof one of the registered institutions. In one embodiment, system 102compares the domain name in the email address field 386 of the customerin account table 312 with the domain name supplied by the institution inorder to determine if the customer is a member of the institution. Forexample, if a college specified that its students have the “college.edu”domain name in their email addresses, then any student that entered anemail address with the “college.edu” in the email address field 624 ofform 600 (FIG. 6), such as “jsmith@college.edu”, would be identified asa member of that college. In another embodiment, system 102 compares theIP address, or some other addressing scheme, of the customer device 124with the IP addresses (or other address) given by the institution inorder to determine if the customer is a member of the institution. Ifthe customer is a member of the institution, the dynamic processingsystem 102 in stage 3408 credits the account of the institution and instage 3410 processes the order from the customer. If in stage 3406 thecustomer is not an institutional member, then system 102 proceeds tostage 3410 in order to process the order. After processing the order instage 3410, the dynamic pricing system is able to receive other ordersin stage 3404. As should be appreciated, the stages in flow chart 3400can be performed in a different sequence than is shown. For example, theorder can be processed and fulfilled in stage 3410 before the dynamicsystem 102 determines whether or not the customer is an institutionalmember in stage 3406. In another embodiment, the dynamic pricing system102 periodically (such as monthly) reviews the purchases of customersthat have been identified as institutional members and credits theaccount of the institutions based on the purchases of their members.

The money accumulated in the institution account can be disbursed at setintervals, at variable intervals, when a specific amount is accumulated,after every purchase by a member, when a specified traffic level isreached and/or in other manners as specified by the institution. Asshould be appreciated, the payments can be made in the same manners asdescribed above for the content suppliers. For instance, one or morescholarships, which were designated by the university, can receive amonthly check from the dynamic pricing system 102 for the last month'saccount balance. By directly and/or indirectly receiving compensationfrom the dynamic pricing system 102, institutions that run institutionalnetworks 115 are provided with an incentive to allow their members toaccess the dynamic pricing system 102. In one form, five-percent (5%) ofsales are rewarded to the institution, and in another form, theinstitution is rewarded $0.005 (½ cent) from each sale. As should beunderstood other types of compensation packages and/or amounts can beused. It should be appreciated that the above technique can be appliedto other types of institutions, besides learning institutions, thatexperience problems with high network traffic, such as charitableorganizations and corporations.

In one embodiment of the dynamic pricing system for dynamically pricingitems for sale by a seller which items are available in a limitedquantity (for which there is an inventory amount) are priced dynamicallywith the desired affect of selling off the inventory by an expirationtime. The dynamic pricing system controls the rate of sale in order tosell out all items by a certain expiration time. In one embodiment, thesystem raises the price to slow the rate of sale and lowers it to speedthe rate of sale.

Those skilled in the art will recognize that items may be available in alimited quantity for a various reasons. For example, the item to be soldmay have a physical limited quantity, e.g. MLB homerun balls hit by BabeRuth, limited editions of collectibles, seats in an entertainment ortravel venue or rooms in an accommodation. Another example of limitedquantity items would be items for which a seller is under a contractualor legal limitation as to the number that may be sold. Additionally, theitems may be simply the number of remaining items on hand, such as itemsin stock at the start of a business liquidation sale. No limitationshould be placed on the reason for which an item is “an item availablein a limited quantity” as that term is used in the application.

The expiration time is a time by which a seller would like to liquidtheir inventory of an item available in a limited quantity. Theexpiration time may be any time picked by the seller or may be a timemandated by the type of item sold, e.g. the sell by date on a perishableitem, or the date of an entertainment event or commercial travel. Theexpiration time may be a specific date on which it is desire that fulloccupancy be obtained in an accommodation. No limitation should beplaced on the reason for which an expiration time is selected.

The database present in memory 112 includes various types of data tofacilitate dynamically pricing the item available in a limited quantityin a manner that will likely result in the inventory of the itembecoming exhausted at or near the expiration time. Among the data storedin memory 112 will be data indicative of the initial quantity of an itemavailable in a limited quantity. Another type of data stored in memory112 is data indicative of the current remaining quantity of the itemavailable in a limited quantity. Yet another type of data stored inmemory 112 is data indicative of an expiration time at which it isdesired that all of the item available in a limited quantity be sold.Other data may include time stamped data indicative of the time of eachsale of the item available in a limited quantity. This time stampedsales data may be linked or otherwise associated with other dataregarding the sale, such as the price at which the sale was consummated,the buyer's name, demographic information regarding the buyer or anyother data already described as being present in the database. In oneembodiment, the data stored in memory 112 includes data indicative ofthe price at which the item available at a limited quantity was sold foreach sale of the item with such data being associated with theappropriate time stamped data indicative of the time at which the itemwas sold at such price. From the time stamped date, sales history datafor each item available in a limited quantity may be stored in thedatabase or may be generated from data stored in memory 112 by theprocessor 110.

The processor 110 is configured to price the item available in a limitedquantity so as to deplete the inventory of the item available in alimited quantity by the expiration date based in part by accessing thememory 112 to retrieve the data indicative of the initial quantity, thecurrent remaining quantity and the expiration time and accessing theclock 111. In one embodiment, the processor 110 is configured toincrease the price of the item available in a limited quantity when thedata stored in memory 112 indicates that inventory of the item availablein a limited quantity based on its prior sales history is likely to beexhausted prior to the expiration time. In another embodiment, theprocessor 110 is configured to decrease the price of the item when thedata stored in memory 112 indicates that remaining inventory of the itemavailable in a limited quantity based on its prior sales history islikely to exist at the expiration time.

In one embodiment, the dynamic pricing server utilizes a pricing modelthat analyzes sales rates. By accessing from memory 112 the dataindicative of the initial inventory, the data indicative of theremaining inventory and the data indicative of an expiration time, theprocessor 110 of the pricing server can calculate how many items need tobe sold by the expiration time. The processor 110 uses this informationand the current rate of sales to decide whether the price should go up(to slow the rate of sales) or down (to increase the rate of sales). Insome embodiments, the pricing server maximizes revenues and sales in theallotted time frame.

As previously mentioned, among the data stored in memory 112 is dataindicative of the initial quantity of an item available in a limitedquantity. For a given product, this is the total number available forsale or the amount of inventory to be depleted by the expiration time.The total supply, in conjunction with the current number of productssold, determines the sales rate required to sell out by the given enddate. The current number of products sold can be determined bysubtracting the value of the data stored in memory that is indicative ofthe current remaining quantity from the value of the data indicative ofthe initial quantity of the item available in a limited quantity. If theseller's supply of a product increases, then the sales rate required tocompletely sell out the product will increase, likely causing the priceto drop. If the seller's supply decreases, then the sales rate requiredto completely sell out will decrease, likely causing the price to rise.

The data stored in memory 112 that is indicative of an expiration timeat which it is desired that all of the item available in a limitedquantity be sold establishes an end date. The end date is the date andtime by which the total supply of a product must be exhausted.Preferably the product, or item available in a limited quantity, to havea meaningful, non-arbitrary end date. In one embodiment, the processor110 of the dynamic pricing server utilizes a pricing model that strivesto sell all of the supply of a product at the highest price possible. Inone embodiment, the processor 110 of the pricing server is configured toattempt dynamically price the product to sell the last product at thelast minute on the last day. Supposing similar supplies and purchasingcharacteristics, a product with a later end date, since it has a longertime to sell the same amount of product, will, in principle, sell for ahigher average price than a product with a sooner end date. In manyinstances, where it is desirable to maximize profits, because theaverage price and therefore the total profit of a product depend so muchon the length of time the product is up for sale, the expiration timemight represent a point where the product either becomes worthless orhas a very great drop in worth.

As previously mentioned, the databases present in memory 112 may includedata indicative of a minimum price for a product. The minimum price isthe lowest price allowed to be assigned to the product.

One embodiment of a pricing parameter model which the pricing server isconfigured to implement in order to exhaust the inventory of a productavailable in a limited quantity by an expiration date utilizes a pricinginterval length parameter, a significance level parameter, a δ (delta)parameters.

The pricing interval parameter is indicative of the length of timebetween data analysis and price calculation. A longer interval willallow for better mitigation of rapid jumps and drops in demand cycles,but won't allow the pricing model to react as quickly. A shorterinterval will allow the pricing model to react quickly to jumps anddrops in demand cycles, but may overreact to some of those jumps anddrops.

The significance level parameter determines the points of probability atwhich the processor 110 is configured to determine to either lower,raise, or maintain the price of the item available in a limited supply.A lower significance level will decrease the range of probabilities inwhich a price can be raised or lowered and increase the range ofprobabilities in which a price will be left alone. Popular values forsignificance level parameters are 0.01, 0.05, and 0.10. A value of 0.05for the significance level parameter may provide desired results inembodiments of the disclosed system.

The delta δ parameter is used to calculate a new price both in the eventthat it is determined that the price must rise and in the event that theprice must fall. In the case of a price rise, δ is used in the form:

P _(N) =P _(O)*(1+δ)  (Equation 17)

In the case of a price fall, δ is used in the form:

P _(N) =P _(O)/(1+δ)^(α)  (Equation 18)

In both cases, a greater δ will result in a greater change in price. Thevalue of δ used in simulations of one embodiment of the system fordynamically pricing items for sale by a seller which items are availablein a limited quantity with the desired affect of selling off theinventory by an expiration time was 0.10.

The alpha α parameter is used to calculate the new price in the case ofa price fall. When used, it takes the form:

P _(N) =P _(O)/(1+δ)^(α)  (Equation 19)

A greater value for the alpha a parameter will result in a greater dropin price. The value of α used in the simulations of one embodiment ofthe system for dynamically pricing items for sale by a seller whichitems are available in a limited quantity with the desired affect ofselling off the inventory by an expiration time was 0.5.

In one embodiment, the algorithm implemented by the processor 110receives seven inputs, the total supply of the product remaining, thetotal time left, the current price of the product, the sales at thecurrent price, the time at the current price, the minimum price, thesignificance level delta and alpha parameters. In this embodiment, thealgorithm runs periodically, e.g. every T minutes (the pricing intervalparameter), and the price of the product starts at an initial pricesupplied by the seller. The initial price may be established in othermanners within the scope of the disclosure. The algorithm determines therate at which the product must be sold to exhaust the inventory of theproduct at the expiration time by dividing the total supply of theproduct left by the time remaining until the expiration time. Thealgorithm then causes the processor 110 to calculate the probabilitythat the when selling at the calculated sales rate that s or fewerproducts would be sold in an interval t. This probability can beexpressed in many ways, however, in one specific embodiment, theprobability P_(<st) is expressed:

$\begin{matrix}{P_{< {st}} = {^{({{- z}*t})}{\sum\limits_{0}^{s}\left( {z*t} \right)^{i/{i!}}}}} & \left( {{Equation}\mspace{14mu} 20} \right)\end{matrix}$

The processor 110 then calculates the probability that, when selling atthe calculated sales rate, that more than the current sales rate will beaccomplished in the interval t. This probability can be expressed inmany ways, however, in one specific embodiment, the probability P_(>st)is expressed:

P _(>st)=1−P _(<st)  (Equation 21)

If the more than the current sales rate will be accomplished in theinterval t is greater than the significance level parameter(P_(>st)<=Significance level parameter), then the price is increased bythe processor 110. This is because it would be very likely that theactual rate of sales is higher than the currently calculated selloutrate and therefore the price should be increased to avoid depleting theremaining inventory prior to the expiration time. In one specificembodiment, the new raised price is the current price times the sum(1+delta). If the processor does not determine thatP_(>st)<=Significance level parameter), then the processor determineswhether probability that s or fewer products would be sold in aninterval t is less than or equal to the significance level parameter(P_(<st)<=significance level). If so, the price of the product islowered from the current price. In one specific embodiment the price islowered to a level of the current price divided by (1+delta)^(alpha).The price is lowered because if P_(<st)<=significance level, then it isvery likely that the actual sales rate is significantly lower than thesell out rate.

In one embodiment, if the price is lowered, the processor 110 may checkmemory 112 to determine if the new price is less than a minimum priceset by the seller and if so adjust the new price to the minimum price.Otherwise the price of the product is left at the current price andanother cycle of the algorithm is performed.

As should be appreciated the above-discussed dynamic pricing system 102can be used to dynamically price other types of items. These items caninclude, but are not limited to, movie tickets; concert tickets; CD'scontaining selected songs; DVD's; artist memorabilia, such as t-shirtsand the like; and video rental coupons. The coupons and tickets can bedownloaded from the dynamic pricing system 102 and/or physicallydelivered to the customer. When a ticket or coupon is downloaded, thecustomer can print the ticket out with the printer 125. To preventforgery, the tickets and coupons can contain authentication information,such as a unique serial number, bar code and/or design. Artistmemorabilia for example can be physically delivered to the customer orthe customer can download a coupon that can be redeemed at a local storein order to receive the memorabilia. Likewise, a CD containing selectedsongs and/or albums can be mailed to the customer or a coupon for the CDcan be redeemed at a local store.

While the invention has been illustrated and described in detail in thedrawings and foregoing description, the same is to be considered asillustrative and not restrictive in character, it being understood thatonly the preferred embodiment has been shown and described and that allchanges and modifications that come within the spirit of the inventionare desired to be protected.

1. A dynamic pricing system for pricing items for sale by a seller whichitems are available in limited quantity, the system comprising: apricing server including a memory, a processor, and a clock; data storedin the memory indicative of a previous quantity of items available in alimited quantity; data stored in the memory indicative of a currentremaining quantity of the items available in a limited quantity; datastored in the memory of an expiration time at which it is desired thatall of the items available in a limited quantity be sold; and whereinthe processor is configured to control a rate of sale in order to sellout the items available in a limited quantity by the expiration time andto price the items available in a limited quantity so as to deplete aninventory of the items available in a limited quantity by the expirationtime based in part by accessing the memory to retrieve data indicativeof the previous quantity, the current remaining quantity, and theexpiration time and accessing the clock.
 2. The system of claim 1further comprising data stored in the memory indicative of a saleshistory of the items available in a limited quantity.
 3. The system ofclaim 2 further comprising time stamped data stored in the memoryindicative of each sale of the items available in a limited quantity. 4.The system of claim 2 wherein the processor is configured to increasethe price of the items available in a limited quantity when the datastored in the memory indicates that inventory of the items available ina limited quantity based on prior sales history is likely to beexhausted prior to the expiration time.
 5. The system of claim 2 whereinthe processor is configured to decrease the price of the items when thedata stored in the memory indicates that at least some of remaininginventory of the items available in a limited quantity based on priorsales history is likely to exist at the expiration time.
 6. The systemof claim 3 further comprising data stored in the memory of the price atwhich the items available at a limited quantity was sold for each saleof the item, such data being associated with the time stamped dataindicative of the time at which the item was sold at such price.
 7. Adynamic pricing system for pricing items for sale by a seller whichitems are available in limited quantity, the system comprising: apricing server including a memory, a processor, and a clock; data storedin the memory indicative of a previous quantity of items available in alimited quantity; data stored in the memory indicative of a currentremaining quantity of the items available in a limited quantity; datastored in the memory of an expiration time at which it is desired thatall of the items available in a limited quantity be sold; and whereinthe processor is configured to control a rate of sale in order tomaximize revenue for the items available in a limited quantity by theexpiration time and to price the items available in a limited quantityso as to maximize revenue of the items available in a limited quantityby the expiration time based in part by accessing the memory to retrievedata indicative of the current rate of sale, the current remainingquantity, and the expiration time and accessing the clock.
 8. The systemof claim 7 further comprising data stored in the memory indicative of asales history of the items available in a limited quantity.
 9. Thesystem of claim 8 further comprising time stamped data stored in thememory indicative of each sale of the items available in a limitedquantity.
 10. The system of claim 8 wherein the processor is configuredto increase the price of the items available in a limited quantity whenthe data stored in the memory indicates that inventory of the itemsavailable in a limited quantity based on prior sales history is likelyto be exhausted prior to the expiration time.
 11. The system of claim 8wherein the processor is configured to decrease the price of the itemswhen the data stored in the memory indicates that at least some ofremaining inventory of the items available in a limited quantity basedon prior sales history is likely to exist at the expiration time. 12.The system of claim 9 further comprising data stored in the memory ofthe price at which the items available at a limited quantity was soldfor each sale of the item, such data being associated with the timestamped data indicative of the time at which the item was sold at suchprice.
 13. A dynamic pricing system for pricing items for sale by aseller which items are available in limited quantity, the systemcomprising: a pricing server including a memory, a processor, and aclock; data stored in the memory indicative of a current rate of sale ofitems available in a limited quantity; data stored in the memoryindicative of a current remaining quantity of the items available in alimited quantity; data stored in the memory of an expiration time atwhich it is desired that all of the items available in a limitedquantity be sold; and wherein the processor is configured to control arate of sale in order to sell out the items available in a limitedquantity by the expiration time and to price the items available in alimited quantity so as to deplete an inventory of the items available ina limited quantity by the expiration time based in part by accessing thememory to retrieve data indicative of the current rate of sale, thecurrent remaining quantity, and the expiration time and accessing theclock.
 14. The system of claim 13 further comprising data stored in thememory indicative of a sales history of the items available in a limitedquantity.
 15. The system of claim 14 further comprising time stampeddata stored in the memory indicative of each sale of the items availablein a limited quantity.
 16. The system of claim 14 wherein the processoris configured to increase the price of the items available in a limitedquantity when the data stored in the memory indicates that inventory ofthe items available in a limited quantity based on prior sales historyis likely to be exhausted prior to the expiration time.
 17. The systemof claim 14 wherein the processor is configured to decrease the price ofthe items when the data stored in the memory indicates that at leastsome of remaining inventory of the items available in a limited quantitybased on prior sales history is likely to exist at the expiration time.18. The system of claim 15 further comprising data stored in the memoryof the price at which the items available at a limited quantity was soldfor each sale of the item, such data being associated with the timestamped data indicative of the time at which the item was sold at suchprice.